I 


GIFT  OF 
Mrs.    Bernard  Moses 


fF 


The  character  and  amount  of  money  per  capita  in  any  country  are  determined 
■olely  by  the  local  conditions  un<l«r  the  operation  of  economic  law,  and  neither 
the  gold  nor  silver  mines,  nor  mints,  in  such  country  control,  or  even  bear  the 
slightest  relation  to,  the  amount  of  gold  or  silver  in  circulation  in  that  country. 


^*  To  secure  speedy,  g:eiieral,  and  permanent 
prosperity  our  finances  should  be  readjusted  and 
our  currency  should  be  reformed." 


ADDRESS 


OF 


HON.  CHARLES  N.  (FOWLER, 

OF    IS^ETV^    JERSEY, 

IN  TlIK 

HOUSE  OF  REPRESENTATIVES, 

AA^ednesday,  March  31,  1897. 


That  Bimetallism,  National  or  Interuauonal,  which  carries  with  it  the  thought 
that  there  can  be  a  double  standard  or  measure  of  value,  is  a  mero  theoretical  myth. 
It  coi'.trauicta  all  experience  and  gives  the  lie  to  nature  itself;  for  neither  by 
imperial  edict  nor  legislative  enactment  can  two  commodities  which  are  steadily 
increasing  in  production,  always  varying  in  cost,  and  constantly  changing  in  use 
be  kept  equal  in  value  at  any  given  ratio. 

The  question  of  a  standard  of  value  being  under  investigation  in  1831,  a  Demo- 
cratic Congressional  committee,  with  Campbell  P.  White  as  chaii'man,  reported 
as  follows : 

"The  committee  think  that  the  desideratum  in  tlie  monetary  system  is  the 
standard  of  uniform  value.  They  can  not  ascertain  that  both  metals  have  ever 
circulated  simultaneously,  concurrently,  and  indiscriminately  in  any  country 
where  there  are  banks  or  money  dealers,  and  they  entertain  the  conviction  that 
the  nearest  approach  to  an  invariable  standard  is  its  establishment  in  one  metal, 
which  metal  shall  compose  exclusively  the  currency  for  large  payments." 


1897. 


:#i 


The  character  and  amount  of  money  per  capita  in  every  cbtintry  are  determined 
solely  by  the  local  conditions  under  the  operation  of  economic  law,  and  neither 
the  gold  nor  silver  mines,  nor  mints,  control,  or  even  bear  the  slightest  relation 
to  the  amount  of  gold  or  silver  in  circulation. 


"To  secure  speedy,  general,  and  permanent 
prosperity  our  finances  should  be  readjusted  and 
our  currency  should  be  reformed.'' 


ADDRESS 

OP 

HON.  CHARLES  N.  FOWLER, 

n 
OW    ISTETV    JERSEY, 
IN  THE 

nOUSE  OF  REPRESENTATIYES, 
Wednesday,  March  31,  1897. 


That  Bimet.nllism,  ^N'ational  or  International,  which  carries  with  it  the  thonjrht 
that  there  cau  be  a  double  standard  or  measure  of  value,  is  a  mere  theoretical  nijth. 
It  contradicts  all  experience  and  gives  the  lie  to  nature  itself;  for  neither  by- 
imperial  edict  nor  legislative  euactiiieut  cau  two  commodities  which  are  steadily 
increasing  in  production,  always  varying  iu  cost,  and  constantly  changing  in  use 
he  kept  equal  in  value  at  any  given  ratio. 

The  question  of  a  standard  of  value  being  under  investigation  in  1831,  a  Demo- 
cratic Congressional  committee,  with  Campbell  P.  "White  as  chairman,  reported 
as  follows : 

"The  committee  think  that  the  desideratum  in  the  monetary  system  is  tlie 
standard  of  uniform  value.  They  can  not  ascertain  that  botli  metals  have  over 
circulated  simultaneously,  concurrently,  and  indiscriminately  iu  any  country 
where  tbere  are  banks  or  money  dealers,  and  thoy  entertain  the  conviction  that 
the  nearest  apjtroach  to  an  invariable  standard  is  its  establishment  in  one  metal, 
which  metal  shall  compose  exclusively  the  currency  for  large  pa^-ments." 


W^SHIlSTGrXON', 
1897. 


:  •   .         •••••••• 

•  •••       •  •    •  ••  •  •• 


•  •  • 

•  •  •  • 
...  •  ., 

•  •  •  • 


Qh   J      |\^sf3ev-a.l.  V\o^^ 


\ 


SPEEOn 

OI" 

HON.  CHAELES  N.  FOWLER, 


On  the  "bill  (H.  II.  379)  to  provide  revenue  for  the  Government  and  to  encour- 
age the  industries  of  the  United  States. 

Mr.  FOWLER  of  New  Jersey  said: 

Mr.  Chairman:  During  the  discussion  of  this  measure  I  have 
been  more  deeply  impressed  than  ever  that  the  relation  of  revenue 
to  our  present  crisis  is  of  comparatively  slight  importance. 

The  second  object  of  the  measure  will  be  more  far-reaching  in 
its  effects  it  its  purposes  are  attained  by  its  passage. 

Nor  will  the  mere  coincidence  of  the  gradual  revival  of  business 
with  its  passage  be  any  guaranty  that  those  who  assume  that  our 
real  difficulty  is  lack  of  revenue  are  correct  in  their  conclusion. 
For  it  is  more  than  likely  that  in  the  near  future  we  shall  see  suffi- 
cient money  coming  into  the  Treasury  to  pay  our  current  expenses, 
and  yet  our  gold  reserve  insufficient  to  cover  the  balance  of  trade 
against  ua. 

Bat  this  fact  of  itself  w<mld  not  be  so  eeHous  a  matter  did  it  not 
involve  every  enterprise  and  personal  transaction  from  one  end  of 
the  country  to  the  other.  If,  therefore,  this  dire  calamity  can 
come  upon  us,  even  though  our  revenues  are  sufficient  to  cover  onr 
expf'napa,  it  is  evident  we  have  not  yet  solved  the  difficulty,  and 
mu.st  look  deeper  and  farther. 

Deeply  impressed  as  I  am  with  the  gravity  of  the  situation, 
while  I  heartily  approve  of  any  effort  that  will  tend  to  better  our 
condition,  I  can  not  admit  by  my  silence  even  that  the  present 
me-astire  wiU  more  than  procrastinate  the  evil  day.  possibly  the 
day  of  national  repudiation,  certainly  a  day  of  panic,  ruin,  and  de- 
struction of  values  surpassing  anything  men  now  living  have 
ever  witnessed. 

^03  0 


741837 


With  these  convictions  I  deem  this  occasion  the  most  opportune 
for  a  discussion  of  those  questions  which,  in  my  judgment,  must 
be  settled  before  we  can  confidently  look  for  anything  like  a  gen- 
eral and  permanent  prosperity. 

First.  Our  finances  should  be  readjusted. 

Second.  Our  currency  should  be  reformed. 

With  permission,  I  shall  insert  in  the  Record  a  measure  intro- 
duced at  this  session  proposing  certain  amendments  to  our  national- 
bank  act  with  the  view  of  taking  the  United  States  out  of  the 
banking  business,  refunding  the  national  debt,  reforming  the  cur- 
rency, insuring  depositors,  improving  and  extending  our  banking 
system,  and  providing  funds  in  case  of  a  deficit. 

[Fifty-fifth  Congress,  first  session.] 
In  the  House  op  Representatives,  March  15, 1897. 

Mr.  Fowler  of  New  Jersey  introduced  the  following  bill; 
which  was  referred  to  the  Committee  on  Banking  ana  Cur- 
rency, and  ordered  to  be  printed: 

A  bill  (H.  R.  50)  to  amend  the  national -bank  act,  take  the 
United  States  Government  out  of  the  banking:  business, 
refund  the  national  debt,  reform  the  currency,  insure  de- 
positors, improve  and  extend  our  banking  system,  and  to 
provide  funds  in  case  of  a  deficit. 

Be  it  enacted  by  the  Senate  and  House  of  Repre 

sentatives  of  the  United  States  of  America  in  Con 

gress  assembled.  That  there  shall  be,  and  there  is 

Department  hereby,  created  and  established  a  Department  of 

of  Finance.         Finance,  which  shall  have  entire  and  exclusive  con- 
trol and  supervision  of  all  national   banks,  their 
right  to  take  out  secured  circulation  and  issue  their 
notes. 
Ministers    of     Sec.  2.   That  there  shall  be  three  ministers  of 

finance.  finance,  who  shall  take  the  place  of  the  Comptroller 

of  the  Currency  and  constitute  a  board  of  finance; 
and  said  board  of  finance  shall  conduct  the  said 
Department  of  Finance.  That  said  ministers  of 
finance  shall  be  appointed  by  the  President,  by  and 
with  the  advice  and  consent  of  the  Senate,  and  the 
term  of  office  shall  be  for  a  period  of  twelve  years, 
at  a  salary  of  ten  thousand  dollars  per  annum;  and 
said  ministers  shall  be  removed  only  by  and  with 
the  consent  of  the  Senate  for  cause  stated  in  writing. 
That  the  term  of  the  first  three  ministers  shall  be 
for  twelve,  eight,  and  fviur  years,  respectively.  The 
minister  appointed  for  twelve  years,  and  his  succes- 
sors, shall  be  known  as  First  Minister  of  Finance, 
and  he  shall  preside  at  all  meetings  of  the  board  of 
finance;  and  the  remaining  two  ministers  shall  be 
known  as  Associate  Ministers  of  Finance. 
"Wh  o      may      Sec.  3.  That  any  national  bank  now  doing  busi- 

organize.  ness,  or  any  other  financial  institution  doing  a  simi- 

lar business,  or  any  number  of  persons  may,  in  ac- 
cordance with  existing  law,  so  far  as  the  same  is 
2768 


consistent  with  this  act,  organize  upon  the  following 
terms  and  conditions: 

If  anv  corporation  or  association  of  persons  de-  How  banks 
scribed  "as  aforesaid  shall  deposit  with  the  United  ^l^all  organize. 
States  Government  any  of  the  United  States  bonds 
now  outstanding,  or  any  that  may  be  hereafter 
issued  which,  attheir  stated  value  as  herein  set  forth, 
(a)  shall  be  equal  to  the  required  amount  of  circula- 
tion in  the  respective  cases  specified,  (b)  the  United  , 
States  Grovernment  shall  issue  to  said  corporation, 
in  lieu  of  said  bonds  so  deposited,  United  States 
Grovernment  bonds  bearing  interest  at  the  rate  of 
two  per  centum  per  annum,  (c)  equal  in  amount  to 
the  value  thereof,  both  principal  and  interest  of  said 
new  bonds  being  payable  in  gold  coin,  and  to  have 
the  like  qualities,  privileges,  and  exemptions  pro- 
vided by  the  act  approved  January  fourteenth, 
eighteen^hundred  and  seventy- five,  entitled  "'An  act 
to  provide  for  the  resumption  of  specie  payments;" 
and  said  new  bonds  shall  thereupon  be  deposited 
with  the  United  States  Government,  and  circulation 
known  as  United  States  Government  bond  notes 
shall  be  issued  to  said  corporation  in  an  amount 
equal  to  the  new  bonds  so  deposited,  said  United 
States  Government  bond  notes  being  in  denomina- 
tions of  ten  dollars  or  multiples  thereof. 

(a)  That  the  United  States  Government  bonds  Price  at  which 
now  outstanding  shaU  be  received  at  the  following  cJwed^  ®' 
prices,  to  wit: 

2s,  rag Q.Mar.  95^ 

Is,  m)7,  reg y,  Jan.  lU9i 

4s,  1907,  coup Q,  Jan.  110^ 

4s,  192,5,  reg Q,  Feb.  120^ 

4s,  1925,  coup Q,  Feb.  120^ 

5s,  1901,  reg Q,  Feb.  113| 

5s,  1904,  coup Q,  Feb.  113J 

Gs,  cur'cy,  '98,  reg J.  &  J.  102f 

6s,  cur'cy,  '99.  reg J.  &  J.  105 

4s  (Cher.),  1897,  reg March.  103 

48  (Cher.),  1898,  reg March.  103 

4s  (Cher.),  1899,  reg March.  102 

and  that  from  and  after  the  passage  of  this  act  said 
bonds  shall  be  received  upon  the  same  income  basis, 
respectively. 

(b)  All  banks  organized  under  this  act  shall  take  Amount  of 
out  for  issue  United  States  Government  bond  notes  United  States 
in  proportion  to  their  respective  capital  as  follows:  bond^^n™  tes 
All  banks  having  a  paid-up  capital  of  one  million  banks  shall  take 
dollars  and  over  shall  take  for  issue  five  hundred  o^*- 
thousand  dollars  of  such  notes;  all  banks  having  a 

paid-up  capital  of  two  hundred  thousand  dollars  and 
less  than  one  million  dollars,  shall  take  for  issue  an 
amount  of  United  States  Government  bond  notes 
equal  to  one-half  of  their  respective  capitals;  but  no 
one  of  said  banks  sliall  take  for  issue  less  than  two 
hundred  thousand  dollars  of  said  notes;  all  banks 
having  less  than  two  hundred  thousand  dollars  of 
paid-up  capital  shall  take  for  issue  an  amount  of 
said  United  States  Government  bond  notes  equal  to 
their  respective  capitals,  "and  each  bank  shall  pay    Tax  to  be  paid. 

2763 


into  the  United  States  Treasnry  one-fonrth  of  one 
per  centum  per  annum  upon  the  notes  so  taken  out 
for  issue  as  a  part  of  the  fund  to  be  created  and 
Imown  as  "United  States  National-bank  Note 
Redemption  Fund." 
Bonds,  when  (c)  The  first  one  hundred  million  of  said  two  per 
°^®'  centum  bonds  that  are  issued  in  exchange  for  other 

United  States  bonds  shall  become  due  in  nineteen 
hundred  and  forty-five. 

The  second  one  hundred  million  of  said  two  per 
centam  bonds  that  are  issued  in  exchange  for  other 
United  States  bonds  shall  become  due  in  nineteen 
hundred  and  forty. 

The  third  one  hundred  million  of  said  two  per 
centum  bonds  that  are  issued  in  exchange  for  other 
United  States  bonds  shall  become  due  in  nineteen 
hundred  and  thirty-five. 

The  fourth  one  hundred  million  of  said  two  per 
centum  bonds  that  are  issued  in  exchange  for  other 
United  States  bonds  shall  become  due  in  nineteen 
hundred  and  thirty. 

The  fifth  one  hundred  million  of  said  two  per 
centum  bonds  that  are  issued  in  exchange  for  other 
United  States  bonds  sliaD  become  due  in  nineteen 
hundred  and  twenty-five. 

The  si.xth  one  hundred  million  of  said  two  per 
centum  bonds  that  are  issued  in  exchange  for  other 
United  States  bonds  shall  become  due  in  nineteen 
hundred  and  twenty. 

The  seventh  one  hundred  million  of  said  two  per 
centum  bonds  that  are  issued  in  exchange  for  otlier 
United  States  bonds  shall  become  due  in  nineteen 
hundred  and  fifteen. 

The  two  per  centum  bonds  that  are  issued  in  ex- 
change for  the  balance  of  the  United  States  bonds 
then  outstanding  shall  become  due  in  nineteen  hun- 
dred an<l  ten. 

That  the  amount  of  United  States  Government 
bond  notes  which  the  banks  organized  under  this 
act  are  required  to  take  out  for  issue  may  be  grad- 
ually reduced  and  retired  a^  follows:  1  wenty-five 
per  centum  thereof  may  be  retired  in  nineteen  hun- 
dred and  ten.  twenty-five  per  centum  in  nineteen 
hundred  and  fifteen,  twenty  five  [)er  centam  in  nine- 
teen hundred  and  twenty,  ami  the  remaining  twenty- 
five  per  centum  in  nineteen  hundred  and  twenty- 
five. 
AH  hondboid-     All  other  holders  of  United  States  Government 

^iV ^^  "^  p ^«  ^ ^ '  bonds  are  hereby  auihorized   and   entitled   to  ex- 
change tor  new    ,  ^,  •'  ^  ^.  •       i.      i  c     ^ 
2     per    cent  change  the  same  at  any  time  prior  to  January  fir.st, 
bonds.                 eighteen  hnndre<i  and  n  nety  nine,  for  the  said  new 
two  per  centum  United  States  (xovernnient  bonds 
upon  the  income  basis  hereinbefore  set  forth. 
Lepra]    tender      Sec.  4.   That  «aid  Un  ted  States  Government  bond 
between  banks,  notes  shall   be  a  legal  tender  between  ail  national 
banks  and  shail   be   redeeme  i    in  gold  com  when 
presented  for  payment  at  the  bank  of  issue. 
8783 


Sec.  5.  That  at  the  same  time  that  sai4  corpora-  Exchanare  of 
tion,if  located  in  a  res;^rve city,  shall  deposit  United  and^frfe/by 
States  Government  bonds  as  aforesaid  it  shall  also  banks  in  re- 
deposit  with  the  United  States  Government  United  serve  cities. 
States  legal-tender  notes  or  gold  ci^rtificates,  or  both, 
of  such  an  amount  that  it.  together  with  the  gold  said 
corporation  has  on  hand,  will  eijual  fifteen  per  centum 
of  its  deposits;  and  the  United  States  Government 
shall  deli  ver  to  said  corporation  gold  coin  in  lieu  of 
said  legal-tender  notes  and  said  gold  certificates. 
Said  corporation  shall  also  deposit  at  the  same  time 
with  the  United  States  Government  United  States 
Treasury  notes  or  United  States  silver  certificates, 
at  the  option  of  said  ministers,  or  both,  which,  with 
the  silver  coin  then  held  by  said  corporation,  shall 
amount  to  ten  per  centum  of  its  deposits,  and  the 
United  States  Government  shall  deliver  to  said  corpo- 
ration in  lieu  thereof  silver  coin  of  an  equal  amount; 
andsaid  legal  tendernotes,gold certificates, Treasury 
notes,  and  silver  certificates  shall  be  thereupon  can- 
celed. Said  corporation  shall  thereafter  keep  as  a 
reserve  twenty-five  per  centum  of  its  deposits  in  the 
following  kinds  of  money:  At  least  sixty  per  centum 
of  said  reserve  shall  be  in  gold  coin,  and  the  remim- 
ing  forty  per  centum  of  said  reserve  may  be  in  silver 
coin  or  United  States  Government  bond  notes:  Pro- 
vided, however.  That  in  lieu  of  one-half  of  such  re- 
serve cash  on  deposit,  subject  to  check,  may  be  held 
in  reserve  cities. 

Sec.  6.  That  at  the  same  time  that  said  corpora-  Exchange  of 
tion,  i]  located  outside  a  reserve  city,  shall  deposit  aSd^^silv-er^^by 
United  States  Government  bonds  as  aforesaid,  it  banks  outside 
shall  also  deposit  with  the  United  States  Govern-  reserve  cities, 
ment  United  States  legal-tender  notes,  or  gold  cer- 
tificates, or  both,  of  such  an  amount  that  it,  together 
with  the  gold  coin  said  corporation  has  on  hand, 
will  equal  nine  per  centum  of  its  deposits:  and  the 
United  States  Government  shall  deliver  to  said  cor- 
poracion  gold  coin  in  lieu  of  said  legal-tender  notes 
and  said  gold  certificates.  Said  corporation  shall 
also  deposit  at  the  same  time  with  the  United  States 
Government  United  States  Treasury  notes  or  United 
States  silver  certificates,  at  the  option  of  said  min- 
isters, or  both,  which,  with  the  silver  coin  then  held 
by  said  corporation,  shall  amount  to  six  per  centum 
of  its  deposits,  and  the  United  States  Government 
shall  deliver  to  said  corporation  in  lieu  thereof  sil- 
ver coin  of  an  e(]ual  amount;  and  said  legal- tender 
notes,  gold  certificates.  Treasury  notes,  and  silver 
certificates  shall  be  thereupon  canceled.  Said  cor- 
poration shall  thereafter  keep  as  a  reserve  fifteen 
per  centum  of  its  deposits  in  the  following  kinds  of 
money:  At  least  sixty  per  centum  of  said  reserve 
shall  be  in  gold  coin,  and  the  remaining  forty  per 
centum  of  said  reserve  may  be  in  silver  coin,  or 
United  States  Government  bond  notes:  Provided^ 
however,  That  in  lieu  of  one-half  of  such  reserve 
2763 


8 

cash  on  deposit,  subject  to  check,  may  be  held  In 
reserve  cities. 
United  States  Sec.  7.  That  the  United  States  Government  shall 
not\o^pay  ^out  ^°*  P^^  ^"^^  ^^  reissne  any  United  States  legal- tender 
notes  or  certifi-  notes  or  gold  certificates  from  and  after  the  first  day 
cates  after  of  January,  eighteen  hundred  and  ninety-eight,  but 
1898-99.  ^Q  same  when  received  shall  be  canceled  and  de- 

stroyed; and  further,  that  the  United  States  Gov- 
ernment shall  not  pay  out,  issue,  or  reissue  any 
United  States  Treasury  notes  or  silver  certificates 
from  and  after  the  first  day  of  Jan-uary,  eighteen 
hundred  and  ninety-nine,  but  the  same  when  re- 
ceived shall  be  canceled  and  destroyed, 
no^e  J  aeai^t  S^^' S-  That  any  corporation  organized  under  this 
assets.  ^ct  may,  with  the  permission  and  under  the  super- 

vision and  control  of  the  board  of  finance,  issue  its 
own  circulation,  which  shall  be  furnished  by  the 
United  States  Government  and  be  known  as  United 
States  national-bank  notes.      Said  United    States 
national-bank  notes  shall  be  issued  in  denominations 
of  ten  dollars  and  multiples  thereof,  and  shall  be  a 
first  lien  upon  the  assets  of  the  bank  issuing  the 
same,  and  also  upon  the  liability  of  the  stockhold- 
ers, and  may  be  issued  only  in  the  following  man- 
ner and  upon  the  following  conditions: 
Reserve  of     First.  Every  bank  issuing  United  States  national- 
not^^  i slu  e d  ^^^k  notes  shall  at  all  times  maintain  against  the 
against  assets,    amount  of  such  notes  outstanding  a  reserve  corre- 
sponding to  that  required  against  its  deposits. 
Notes  against     Second.  Any  bank  that  shall  have  complied  with 
sted*^'  ^°^  ^^"  this  law  may,  with  the  consent  and  under  the  super- 
vision and  control  of  the  board  of  finance,  issue  an 
amount  of  United  States  national-bank  notes  equal 
to  twenty  per  centum  or  one-fifth  of  its  paid-up  and 
unimpaired  capital,  and  shall   pay  upon  such  an 
amount  thereof  as  may  be  outstanding  at  any  time 
a  tax  at  the  rate  of  one  per  centum  per  annum. 

Third.  Said  bank  may  issue  a  second  amount  of 
such  notes  equal  to  twenty  per  centum  or  one-fifth 
of  its  paid-up  and  unimpaired  capital,  and  shall  pay 
upon  such  an  amount  thereof  as  may  be  outstand- 
ing at  any  time  a  tax  at  the  rate  of  two  per  centum 
per  annum. 

Fourth.  Said  bank  may  issue  a  third  amount  of 
notes  equal  to  twenty  per  centum  or  one-fifth  of  its 
paid-up  and  unimpaired  capital,  and  shall  pay  upon 
such  an  amount  thereof  as  may  be  outstanding  at 
any  time  a  tax  at  the  rate  of  four  per  centum  per 
annum. 

Fifth.  Said  bank  may  issue  a  fourth  amount  of 
notes  equal  to  twenty  per  centum  of  its  paid-up  and 
unimpaired  capital,  and  shall  pay  upon  such  an 
amount  thereof  as  may  be  outstanding  at  any  time 
a  tax  at  the  rate  of  six  per  centum  per  annum. 

Sixth.  Said  bank  may  issue  a  fifth  amount  of  notes, 
equal  to  twenty  per  centum  or  one-fifth  of  its  paid- 
up  and  unimpaired  capital,  and  shall  pay  upon  §uch 
an  amount  thereof  as  may  be  outstandmg  at  any 
2763 


time  a  tax  at  the  rate  of  eight  per  centum  per 
annum. 

Seventh.  If  the  amount  of  United  States  national- 
bank  notes  issued  by  any  bank  shall  exceed  at  any 
time  the  paid-up  and  unimpaired  capital  of  said 
bank,  a  tax  at  the  rate  of  ten  per  centum  per  annum 
shall  be  paid  by  said  bank  on  such  excess". 

Eighth.  That  said  ministers  of  finance  are  hereby  Suspension  of 
authorized  and  empowered  to  suspend  one-half  of  *^^  ^P°^  notes. 
said  tax  upon  any  one  or  all  of  the  said  several  issues 
of  United  States  national-bank  notes  at  any  time 
after  nineteen  hundred  and  ten,  and  at  any  lime 
after  nineteen  hundred  and  twenty  said  ministers  of 
finance  are  further  authorized  and  empowered  to 
suspend  any  portion  of  the  tax  then  remaining  except 
the  ten  per  centum  tax  referred  to  in  paragraph 
seven. 

Sec.  9.  That  all  taxes  so  paid  to  the  Government  .  Redemption 
upon  said  United  States  Government  bond  notes  and  ^""^^^  iiowused. 
said  United  States  national-bank  notes  shall  consti- 
tute and  be  known  as  the  "United  States  National- 
bank  Note  Redemption  Fund,"  and  be  held  exclu- 
sively for  the  redemption,  first,  of  the  United  States 
Government  bond  notes;    second,  for  the  United 
States  national-bank  notes  m  the  event  of  the  liqui- 
dation of  any  bank  organized  under  this  law:  PrO' 
vided,  however.  That  when  said ' '  Redemption  Fund  "    Use  of  excess 
shall  exceed  five  per  centum  of  both  the  United  States  over  5  per  cent. 
Government   bond   notes   and   the  United   States 
national-bank  notes  such  excess  shall  belong  to  the 
United  States  Government  and  may  be  used  by  it  to 
defray  its  general  expenses. 

Sec.  10.  That  the  board  of  finance  shall  divide  the    Clearing- 
United  States  into  clearing-house  districts,  and  each  hSw  fo?med°^' 
bank  organized  under  this  act  shall  belong  distinct-    Banks  must 
ively  to  some  one  district,  and  the  number  of  such  belong  to  some 
district  shall  be  plainly  and  prominently  printed  ^^^^^^^ 
upon  the  said  United  States  national-bank  notes  is- 
sued by  the  banks  located  therein .     The  several  banks 
of  each  district,  upon  receiving  United  States  na-    Notes  must  be 
tional-bank  notes  belonging  to  any  other  district,  J"^^"^.^fd  to 
shall  forward  the  same  to  a  bank  in  a  clearing-house  district, 

city,  which  shall  retura  them  to  the  district  to  which 
they  belong. 

Sec.  U.  That  thesaid  United  States  national-bank  Legal  tender 
notes  shall  be  a  legal  tender  at  par  between  all  na-  between  banks, 
tional  banks,  and  the  same  shall  be  redeemed  upon 
presentation  at  the  bank  of  issue  in  gold  coin,  or  at 
the  option  of  the  bank  of  issue  forty  per  centum 
thereof  may  be  redeemed  in  United  States  Govern- 
ment bond  notes. 

Sec.  12.  That  each  bank  organized  under  this  act    Banks  outside 
and  doing  business  outside  of  a  clearing-house  city  ^"ouffh  °  some 
shall  select  some  national  bank  in  the  clearing-house  bank  in  clear- 
city  of  its  own  district  through  which  it  shall  re-  ing-house  city, 
deem  its  United  States  national-bank  notes  in  gold 
coin,  or  at  the  option  of  said  redemption  bank  forty 
per  centum  thereof  may  be  redeemed  in  United 
2763 


10 

Stntes  Government  bond  notes,  and  for  said  purpose 
shall  keep  on  deposit  with  said  bank  a  reserve  of 
five  per  centum  of  the  amount  at  any  time  outstand- 
ing, and  said  five  per  centum  may  be  considered  a 
part  of  its  required  reserve. 
Banks     with      Sec.  VS.  First.  That  in  cities  with  less  than  two 

$2nA)uO    author-  thousand  populatioti  banks  may  be  organized  under 

^®  '  this  act  with  a  capital  of  twenty  thousand  dollars 

or  any  greater  amount  m  multiples  of  five  thousand 
dollars;  but  no  bank  shall  be  organized  in  any  re- 
serve city   with  a  less  capital  than  one  hundred 
thousand  dollars. 
Branches     Second.  That  under  such  regulations  and  restric- 

Sshe(L  ^  estab-  -tjo^s  as  shall  be  established  by  the  said  ministers  of 
finance,  national  banks  organized  under  this  act 
may  establish  branch  banks  by  and  with  the  con- 
sent of  said  ministers,  such  branch  banks  to  have 
the  right  to  receive  deposits,  make  loans,  grant  dis- 
counts, and  buy  and  sell  exchange,  but  in  no  case 
■  to  be  permitted  to  issue  circulating  notes  other  than 
those  of  the  parent  bank.  It  shall  in  all  respects  be 
considered  as  a  part  of  the  parent  bank,  and  in  each 
case  where  such  branches  are  maintained  the  min- 
isters of  finance  shall  receive  in  the  reports  of  the 
I  central  bank  a  statement,  properly  sworn  to  and 

attested,  of  the  condition  of  its  branches. 

Said  ministers  of  finance  shall  also  have  the  right 
of  separate  and  independent  examinations,  and  they 
may,  whenever  they  deem  it  necessary,  reciuire,  be- 
fore granting  the  right  to  any  bank  to  maintain 
branches,  that  the  paid-up  capital  stock  of  such  bank 
be  increased  to  an  amount  to  be  fixed  by  them. 
United  States     Sec.  14.  First.  That  in  the  event  of  the  liiiuida- 

^haVl*"  redeem  *^'^"  ^^  any  national  bank  organized  under  this  act  the 

no^s.  ^^  ^^  United  States  Government  shall  redeem,  upon  pres- 
entation, after  notice  given  as  herein  provided,  any 
of  said  United  States  Government  bond  notesor  said 
United  States  national-bank  notes,  reimbursing  itself 
for  the  full  amount  thereof  out  of  the  assets  of  said 
bank,  and  distribute  the  remaining  assets  among  the 
depositf^rs  and  all  others  having  c.aims  in  the  same 
manner  as  now  provided  by  law. 
Notes  to  bear     Second.  That  from  the  time  of  the  suspension  of 

interest.  said  bank  up  to  the  date  set  by  said  miui-sters  of 

finance  for  the  redemption  of  said  United  States 
national-bank  notes,  they  shall  bear  interest  at  the 
rate  of  five  per  centum  per  annum.  Such  notice  shall 
be  given  in  some  newspaper  printed  in  the  clearing- 
house city  where  said  notes  were  cleared;  but  noth- 
ing herein  contained  vshall  be  construed  to  impose 
any  liability  upon  the  Government  of  the  Unittd 
States,  or  any  of  its  representatives,  beyond  the 
amount  available  from  time  to  time  out  of  said 
"United  States  National-bank  Note  Redemption 
Fund." 
Banks      may     Sec.  15.  First.  That  any  bank  organized  under 

tosure  deposit  ^j^^g   ^^^  j^^^  ^^  ^j^y  time  after   nineteen  hundred 
and  five,  with  the  consent  of  the  ministers  of  finance, 


11 

insnre  its  depositors  against  loss  by  paying  into  the 
United  States  Treasury  one  per  centum  upon  the 
average  balance  of  deposits  of  the  preceding  fiscal 
year,  and  one-half  of  one  per  centum  upon  the 
average  annual  balances  thereafter  until  the 
amount  so  [)aid  into  the  United  States  Treasury  by 
said  bank  shall  amount  to  five  per  centum  of  the 
average  balance  of  said  bank  for  the  last  preceding 
year,  and  that  said  ministers  of  finance  may  then 
suspend  said  tax  for  the  time  being.  If  the  deposits 
of  said  bank  shall  increase,  or  for  any  reason  the 
amount  of  the  insurance  fund  to  the  credit  of  said 
bank  shall  be  less  than  five  per  centum  of  the  de- 
posits, said  ministers  may  reinipose  said  tax  of  one- 
naif  of  one  per  centum  upon  the  deposits  of  said 
bank;  and  if  said  bank  shall  fail  to  pay  such  tax  at 
any  time  after  the  payment  of  said  one  per  centum 
the  amount  already  paid  by  said  bank  shall  be  for- 
feited to  the  United  States  Government  and  the  in- 
surance of  said  depositt)rs  shall  thereupon  cease. 

Second.  That  the  amounts  of  money  so  received.  Depositors' 
shall  constitute  and  b-  known  as  the  "  Depositors' j-J^^^I/^  ^  **"  °® 
insurance  fund,"  and  each  bank  shall  be  entitled 
to  receive  interest  upon  the  amount  standing  to  its 
credit  in  said  "  Depositors"  insurance  fund,"  at  the 
rateof  two  per  centum  perannum.  and  the  same  shall 
be  adjusted  annually  on  the  thirtieth  day  of  June. 

Third.  That   in    the  event  of   the  suspension    of     United  States 

pavment  by  anv  banU  so  insured  of  any  of  its  lia- 9^,T®^"™^"* 
t  -i'-^  :ii         '  .^1       TT    -^    1   ,-ii    ,        ^  snalJ  pay  aei)os- 

bilities  as  they  accrue,  the  United  States  Govern-  it^rs    in    sixty 

ment  shall,  within  sixty  days  thereafter,  no  reor-daya. 
ganization  then  pending,  pay  the  depositors  of  such 
bank  in  full  all  their  just  ciaims.  if  no  (juestion  has 
be  n  raised  thereto;  but  nothing  herein  contained 
shall  be  c<instrued  to  impose  any  liability  on  the 
Government  of  the  United  States,  or  any  of  its  rep- 
resentatives, beyond  the  amount  available  from  time 
to  time  out  of  said  "  Depositors  insurance  fund." 

P^ourth.  That  the  United  States  Government  shall     United  States 
thereupon  reimb  irse  itself  out  of  the  assets  of  said  ma/ rlimburse 
bank  for  any  and  all  such  moneys  paid  out  on  ar-count  itseif. 
of  said  deposits,  leas  the  amount  standing  to  the  credt 
of  said  bank  in  said  '*  Deposit(jrs'  insurance  fund;" 
and  the  remaining  assets  shall  1)6  disti  ibuted  among 
the  creditors  in  the  same  manner  as  now  provided 
by  law. 

Src.  10.  That  all  moneys  received  by  the  United  Guarantee 
States  Government  on  jucount  of  the  tax  upon  Le"hi1'e!tcl  ^° 
United  States  Government  bond  notes  and  United 
States  national -bank  notes,  or  on  account  of  the 
taxes  [taid  to  insure  dej)osi  ors  ag  inst  loss,  may  be 
invested  in  the  following  classes  of  secui'ities.  and 
no  others:  First.  United  States  Government  lionds 
or  United  States  certificates  of  indebtednes.s:  second, 
the  bonds  of  any  State  wljich  has  not  defaulted  in 
the  payment  of  either  principal  or  interest  of  any  of 
Jts  n<lebtedness  for  twenty  years  ju.si  })rece(Jing  such 
investment;  thiid,  the  bonds  ol  any  city  in  the  United 


12 

States  having  a  population  of  more  than  one  hun- 
dred thousand,  and  which  has  not  defaulted  in  the 
payment  of  either  principal  or  interest  of  any  of  its 
indebtedness  for  twenty  years  just  preceding  such 
investment. 
Means  minis-     Sec.  17.  That  for  the  purpose  of  carrying  this  act 
ters  liave    of  into  effect  and  enabling  the  banks  organized  here- 
acr'mt?  effect  ^^cler  to  maintain  their  required  reserves,  and  for 
'  the  purpose  of  equalizing  and  adjusting  the  relative 
use  of  gold  and  silver  in  the  United  States,  the  min- 
isters of  finance  are  hereby  authorized  and  empow- 
ered to  sell  and  dispose  of  any  of  said  new  two  per 
centum  bonds  at  par  for  gold  coin,  or  to  exchange 
the  same  for  any  of  the  legal-tender  money  of  the 
United  States  at  par;  the  bonds  so  sold  or  exchanged 
to  be  issued  in  denominations  of  twenty-five  dollars, 
or  multiples  thereof,  at  the  option  of  the  buyer,  and 
to  become  due  and  payable  in  nineteen  hundred  and 
fifty;  and  the  said  ministers,  for  the  same  purpose 
(with  the  concurrence  of  the  Secretary  of  the  Treas- 
ury) ,  are  also  authorized  and  empowered  to  exchange 
from  time  to  time  gold  bullion  or  gold  coin  for  sil- 
ver bullion  or  silver  coin,  and  silver  bullion  or  silver 
coin  for  gold  bullion  or  gold  coin. 
Loans  to  offi-     Sec.  18.  That  the  loaas  and  discounts  of  any  bank 
^1^^  ee^^*^    ^™'  organized  under  this  act  granted  to  its  executive  offi- 
p  oyees,  ^^^^  ^^  employees  shall  in  no  case,  directly  or  indi- 

rectly, exceed  ten  per  centum  of  the  capital,  and 
the  same  shall  be  secured  by  proper  collateral,  or  by 
an  additional  signature  or  signatures  of  financially 
responsible  persons  to  the  notes  taken,  and  that  the 
same  be  made  only  upon  the  written  approval  of  a 
majority  of  the  board  of  directors  and  a  separate 
record  thereof  kept. 
Loans  to   di-     Sec.  19.  That  no  loan  shall  be  made  to  a  director 
secured "or^Vu^-  ^^^  ^^  executive  officer  of  the  bank  except  either 
thorized  by^pon  a  deposit  of  good  and  sufficient  collateral  se- 
board.  curity,  or  upon  a  note  given  therefor,  bearing,  in 

addition  to  such  director's  own  name,  the  signature 
or  signatures  of  one  or  more  financially  responsible 
persons,  or  unless  a  resolution  has  been  passed  by 
the  board  of  directors  and  signed  upon  the  record 
by  at  least  a  two-thirds  majority  thereof  giving  to 
such  director  a  line  of  credit  covering  any  advances 
to  be  made  to  him. 
Penalty  for     Sec.  20.  That  any  president,  vice-president,  cash- 
braking  law  by  ier,  assistant  cashier,  or  employee  of  any  bank  or- 
o    cars.  ganized  under  this  act.w^ho  shall  be  convicted  of  un- 

lawfully borrowing  or  using  any  of  the  funds  of  the 
bank  with  which  they  are  connected  shall  be  im- 
prisoned for  ten  years,  and  any  officer  of  any  such 
national  bank  at  the  time  of  its  failure  shall  be  in- 
eligible to  any  official  position  in  any  national  bank 
thereafter. 
Not  to  engage  Sec.  21.  That  it  shall  be  unlawful  for  any  national 
in  speculation,  bank  to  engage  in  the  promotion  of  any  enter- 
prise, or  to  loan  the  funds  of  the  bank  upon  the  bonds 
or  securities  of  incomplete  and  partially  developed 


13 

projects  of  any  kind,  such  as  partially  constrncted 
railroads,  street-car  lines,  electric -light,  gas,  water, 
mining,  manufacturing,  or  irrigation  plants. 

Sec.  23.  That  upon  a  day  in  each  year  to  be  desig-  Director! 
nated  by  said  ministers  of  finance,  the  directors  of  niust  examine, 
the  national  banks  shall  be,  and  are  hereby,  required 
to  make  an  examination  of  the  affairs  of  the  bank 
with  which  they  are  connected,  and  submit  their  re- 
port thereon  upon  blanks  furnished  by  said  minis- 
ters, and  said  report  shall  be  signed  by  at  least  three- 
fourths  of  said  directors. 

Sec.  23.  That  the  assistant  cashier,  in  the  absence    Assistant 
of  the  cashier,  or  on  account  of  his  inability,  shall  sien^otes"^^^ 
be,  and  he  is  hereby,  authorized  to  sign  the  cir- 
culating notes  of  the  bank,  and  s^'gn  and  make  oath 
or  affirmation  to  the  reports  called  for  by  said  min- 
isters of  finance  showing  the  condition  of  the  bank    oaths  mav  be 
with  which  he  is  connected,  and  such  oath  or  afifir-  taken,  how. 
mation  and  all  others  required  of  bank  officers  may 
be  administered  by  any  notary  public  or  commis- 
sioner of  deeds. 

Sec.  24.  That  the  clearing  houses  of  the  respective    Clearing- 
districts  shall  act  under  charters  granted  by  the  ^°j^^^|jq  gj.^^j^jQ| 
United  States  Government,  running  for  fifty  years  by    Govern- 
and  authorizing  them  to  effect  clearances  between  ment. 
banks  and  to  do  other  business  for  and  between 
banks,  in  accordance  with  such  rules  and  regula- 
tions as  may  be  prescribed  by  said  ministers  of 
finance  from  time  to  time. 

Sec.  25.  That  to  provide  for  any  temporary  defi-    -rv   ^  •   • 
ciency  now  existing  in  the  Treasury  of  the  United  in  re  v^e^n  ue  a 
States,  or  which  may  hereafter  occur,  the  Secretary  may  be   pro- 
of the  Treasury  is  hereby  authorized,  at  his  discre-  "^^?^'^^, ?  °  ^ •,  ^^ 
tion,  to  issue  certificates   of   indebtedness  of  the  ^^^^  °^  '^^^'^ 
United  States,  payable  in  from  one  to  five  years 
after  their  date,  to  the  bearer,  in  gold  coin,  of  the 
denomination  of  twenty-five  dollars,  or  multiples 
thereof,  with  annual  coupons  for  interest  at  a  rate 
not  to  exceed  three  per  centum  per  annum,  and  to 
sell  and  dispose  of  the  same  for  not  less  than  an 
equal  amount  of  gold  coin  at  the  Treasury  Depart- 
ment and  at  the  subtreasuries  and  designated  de- 
positories of  the  United  States  and  at  such  post- 
offices  as  he  may  select.    And  such  certificates  shall 
have  the  like  qualities,  privileges,  and  exemptions 
provided  in  the  resumption  act  (approved  January 
fourteenth,  eighteen  hundred  and  seventy-five,  en- 
titled "An  act  to  provide  for  the  resumption  of 
specie  payments  ")  for  the  bonds  therein  authorized. 
And  the  proceeds  thereof  shall  be  used  for  the  pur- 
pose prescribed  in  this  section  and  for  no  other. 

Sec.  26.  That  all  acts  or  parts  of  acts  inconsistent 
with  the  foregoing  shall  be,  and  the  same  are  hereby, 
repealed. 


14 

The  measnre  which  I  now  submit  for  your  consideration  is  but 
an  elaboration  and  redraft  of  my  former  bill,  H.  R.  6442,  and  my 
remarks  will  only  be  an  extension  of  what  I  said  before  the  com- 
mittee on  March  23,  1896. 

IMPORTANCE  OV   A  CORRECT  UNDERSTANDINO. 

It  will  be  comparatively  useless  to  attempt  to  deal  with  the 
financial  question  unless  the  evils  from  which  we  are  suffering 
are  clearly  understood. 

As  well  might  the  physician  attempt  to  treat  a  patient  without 
diagnosing  his  case.  It  is  generally  admitted  now,  I  think,  that 
treatment  is  comparatively  easy  if  you  have  discovered  the  cause 
and  thoroughly  understand  the  disease. 

As  the  treatment  of  any  case  depends  upon  the  diagnosis,  and  as 
treatment  must  diverge  as  opmion  with  regard  to  the  diflBculty 
diverges,  our  first  effort  should  be  to  find  as  many  causes  of  our 
trouble  as  possible  upon  which  we  can  all  agree,  so  that  we  can 
proceed  along  well-established  and  well-recognized  lines  of  treat- 
ment. 

In  the  first  place,  I  think  all  agree  that  our  deplorable  condition 
is  due  to  an  organic  weakness  and  a  functional  malady  often  reach- 
ing an  acute  form,  and  that  durmg  the  past  three  years  our  con- 
dition has  been  chronically  acute.  Our  trouble  involves  both  our 
national  finances  and  the  currency  system  of  our  banking  institu- 
tions. We  may  administer  a  few  sugar-coated  flour  or  dough 
pills  like  increasing  the  circulation  to  par  of  the  bonds  and 
allowing  banks  to  organize  with  smaller  capital  in  ont-of-the- 
way  places,  and  thereby  allay  the  apprehensions  for  the  afternoon; 
but  unless  we  actually  remove  the  organic  difficulty  on  the  one 
hand  with  an  unequivocal  measure  of  value,  and  reenforce  the 
blood  by  infusing  into  the  currency  arteries  the  buoyancy  and 
elasticity  of  our  vast  but  rapidly  exchanging  wealth,  this  old 
malady  will  ever  return  in  more  and  more  mHlignaut  form,  prey 
upon  an  ever- weakening  constitution,  produce  greater  and  greater 
anaemia,  and  end  in  disorder  and  ruin, 

rXJTi r> A MKST A L.  TROUBUa 

Let  us  inquire  first,  then,  what  the  organic  or  c>onstitutional 
weakness  is.  It  began  by  the  Government  issuing  its  first  paper 
money,  possibly  of  necessity,  but  foolishly  kept  in  circulation  long 


15 

aftfir  the  nerefS'ty,  if  any  ever  existed,  had  disappeared;  and  it  is 
no  guaranty  of  wisdom  simply  because  the  Supreme  Court  has 
decided  that  Congress  could  make  nothing  but  a  piece  of  paper, 
that  was  always  being  redeemed  and  yet  is  never  retired,  a  legal 
tender.  There  are  a  great  many  things  that  Congress  can  do  and 
does  do  that  are  supremely  and  superbly  foolish,  and  conspicuous 
among  its  acts  of  this  character  was  the  act  perpetuating  the  exist- 
ence of  the  greenback  long  after  its  purposes,  if  born  of  necessity, 
had  been  served.  If  a  small  portion  of  the  money  that  was  used 
in  paying  off  the  Government  bonds  which  could  not  annoy  us 
had  been  applied  in  liquidating  our  demand  obligations,  we  would 
have  been  saved  an  immense  amount  of  financial  trouble,  and  a 
vast  amount  of  interest,  too,  before  we  have  finished  the  green- 
back chapter.  But  we  were  not  satisfied  even  with  getting  $346,- 
000.000  for  nothing  throughout  eternity,  so  we  started  out  upon 
the  silver  scent;  and  while  we  were  cunning  enough  in  the  act  of 
1878  to  hide  behind  the  coined  dollar  deposited,  we  had  the  hardi- 
hood in  1890  of  increasing  our  demand  obligations  at  the  astound- 
ing rate  of  $50,000,000  a  year,  with  no  way  of  meeting  them  ex- 
cept the  taxing  power  of  the  Government.  We  did  not  even 
assure  the  people  and  the  world  of  our  good  faith  by  putting  up  a 
redemption  fund  corresponding  with  that  lodged  against  the 
greenbacks. 

CREDIT  STRAINED. 

What  happened?  We  soon  found  that  technically  we  had,  in- 
cluding the  national-bank  notes,  about  $1,000,000,000  of  demand 
obligations  out,  and  only  the  same  $100,000,000  we  thought  neces- 
sary to  protect  the  $346,000,000  greenbacks,  when,  in  fact,  we 
ought  to  have  had  at  least  $300,000,000  of  gold  under  the  circum- 
stances. • 

DISTRUSTED  BY  ALIi. 

All  classes  of  our  people,  to  say  nothing  of  the  business  men, 
and  particularly  the  bankers,  were  looking  each  other  mysterj' 
ously  in  the  face  and  inquiring  whether  it  might  not  be  well  to  hide 
away  some  gold.  The  foreign  broker,  wanting  to  appear  conserva- 
tive and  protect  his  client,  and  of  course  get  another  commission 
on  an  excnange  of  securities,  advised  extreme  caution,  pointing 
out  that  it  would  be  impossible  for  the  United  States  to  maintain 

2703 


16 

the  gold  standard,  and  that  it  was  in  a  position,  in  fact,  to  slid© 
from  under  when  the  crash  came. 

What  has  been  the  result?  The  American  people  of  every  class 
have  been  hoarding  gold,  while  the  foreigners  have  been  with- 
drawing their  investments,  and,  what  is  quite  as  bad  for  an  unde- 
veloped country,  withholding  their  money  from  us. 

OUR  DEMAND  OBLIGATIONS  REQUIRE  SALE  OP  BONDS. 

The  large  outstanding  demand  obligations  of  the  Government 
enable  those  who  want  gold  at  home  or  abroad  to  force  the  Gov- 
ernment to  go  on  forever  paying  these  greenback  and  silver  de- 
mands over  and  over  again,  and  yet  they  may  never  be  retired. 
The  only  remedy  left  to  the  Government  under  the  present  cir- 
cumstances is  to  sell  bonds  in  advance  and  comer  the  $500,000,000 
greenbacks  and  Treasury  notes,  about  which  there  is  no  possible 
doubt  as  to  what  the  Government  has  got  to  do,  and  then  wait  for 
a  test  case  of  a  silver  certificate,  which  must  result  in  the  same 
conclusion  and  the  Treasury  be  confronted  with  $335,000,000  more 
of  demand  obligations,  while  the  Government,  which  the  unthink- 
ing call  the  richest  in  the  world,  in  this  very  connection  finds 
itself  without  any  of  those  resources  of  a  bank  to  meet  its  debts 
and  literally  stripped  of  every  means  of  defense  except  its  power 
to  tax  the  people.  Was  there  ever  a  more  pitiable  spectacle  in  the 
world? 

From  the  foregoing  we  have  diccovered  some  of  the  disastrous 
effects  growing  out  of  our  organic  difficulties. 

We  have  observed: 

First.  That  on  account  of  doubt  gold  constantly  left  the  Treas- 
ury and  the  country. 

Second.  That  our  people  nursed  their  gold,  and  the  United 
States  Treasury  was  compelled  to  furnish  all  the  gold  that  was 
wanted  for  any  purpose  whatever,  without  having  any  resource 
except  the  power  to  tax  the  people,  and  yet  must  continue  an  un- 
limited amount  of  the  paying  business  of  a  bank. 

How  shall  we  meet  the  first  difficulty  and  prevent  a  stream 
of  gold  from  flowing  out  of  the  country  and  stop  the  drain  on 
the  Treasury  by  our  own  people? 

There  is  and  will  be  but  one  permanent  cure,  and  that  is  an  un- 
equivocal measu're  of  value  approved  and  adopted  by  all  the  lead- 

2763 


17 

ing  commercial  nations  of  the  world,  and  determined  by  all  human 
experience  to  be  best  suited  for  settling  the  balances  of  trade. 

EXPLICIT  TERMS  IMPERATIVE. 

So  long  as  political  parties  straddle,  and  so  long  as  it  is  possible 
for  members  of  Congress  to  declare  that  the  bonds  of  the  United 
States  are  in  terms  payable  in  silver  as  well  as  gold,  and  so  long 
as  one  branch  of  Congress  or  the  other  shows  its  disposition  by  a 
vote  to  take  advantage  of  the  word  "coin,"  so  long  will  a  most 
expensive,  indeed  possibly  a  ruinous,  doubt  hang  over  this  country. 

COMMON  HONESTY  A  NECESSITY. 

Of  those  who  declare  that  we  are  on  a  gold  basis  and  are  going 
to  pay  our  obligations  in  gold  I  would  like  to  inquire,  Why  do 
we  not  put  it  in  black  and  white  and  save  this  country  millions  in 
interest  every  year,  and  secure  hundreds  of  millions  for  invest- 
ments to  develop  our  vast  resources?  For  there  is  no  country  on 
the  face  of  the  earth  with  our  citizenship,  civilization,  well-estab- 
lished laws,  and  natural  resources  (which  are  the  magnets  that 
determine  where  capital  goes) ,  and  therefore  so  assuring  to  capital, 
as  our  own,  if  the  measure  of  value  were  only  unalterably  fixed. 

How  shall  we  overcome  the  second  difficulty,  that  has  made  this 
great  country  ridiculous  and  may  render  it  financially  impotent, 
because  the  people  demand  that  this  debt-doubling  process  shall 
cease,  little  dreaming  of  the  consequences  that  must  ensue?  If 
we  would  escape  the  incomprehensible  trouble  in  either  event,  we 
must  cease  the  anomalous  position  of  filling  all  the  paying  func- 
tions of  a  bank  without  any  of  its  natural  resources. 

In  other  words,  the  two  remedies  for  our  organic  difficulty  are 
these: 

riTND  THE  DEBT. 

First.  Refund  our  national  debt  in  long-time  2  per  cent  gold 
bonds,  furnishing  a  basis  of  circulation  for  our  national  banks  and 
thereby  giving  to  the  people  a  money  redeemable  in  gold  over  the 
counter  of  the  bank  of  issue,  thus  utterly  destroying  the  gold- 
hoarding  habit  at  home,  and  dissipating  the  last  vestige  of  doubt 
and  fear  abroad. 

RETIRE  ALL  DEMAND  OBLIGATIONS. 

Second.  Get  the  Government  out  of  the  banking  business  by 
converting  the  greenbacks  and  Treasury  notes  into  metal  reserves 

2763—3 


18 

of  the  national  banks,  and  send  the  silver  dollars  whirling  into 
the  tills  of  onr  merchants  and  over  the  counters  of  our  banks. 

NATIONAL  CREDIT  ALWAYS  SAFB. 

This  done,  the  credit  of  the  nation  can  not  be  threatened  in  times 
of  peace  and  ought  to  be  maintained  unimpaired  in  times  of  war. 
Its  business  would  then  be  just  what  that  of  New  York,  Chicago, 
or  San  Francisco  is — the  collection  of  money  for  the  pajTnent  of 
current  expenses — and  every  dollar  of  the  $625,000,000  of  gold  in 
the  United  States  would  be  free  money,  and  would  be  taken  from 
the  safe-deposit  boxes,  drawers,  and  stockings  and  turned  into  the 
channeda  of  commerce. 

OUR  TROtTBLB  BTOT  LACK  OF  RJS  V ISN  UlS. 

So  far  as  I  have  been  able  to  discover,  there  is  but  one  other  view 
entertained  with  regard  to  our  organic  weakness,  and  that  has 
been  entertained  by  my  fellow-Republicans — indeed,  originated 
with  them — but  which  is  far  more  political  than  philosophical,  and 
which  will  not  stand  the  test  of  fact  established  by  investigation. 

Beginning  with  President  Arthur,  we  were  warned  continually 
of  the  danger  that  would  grow  out  of  expanding  our  demand  obli- 
gations, and  all  recognized  economic  writers  pointed  out  the  dan- 
ger long  before  President  Harrison  left  his  office.  Even  before 
there  had  been  a  deficiency.  Secretary  Foster  was  panic-stricken 
and  the  Republican  Administration  had  prepared  and  was  ready 
to  issue  $50,000,000  of  bonds  for  no  other  purpose  than  to  build  up 
the  credit  of  the  nation  by  increasing  the  reserve. 

I  think  it  will  not  be  denied  by  anyone  who  will  take  the  trouble 
to  study  the  changes  from  1878  to  1893  that  had  the  Government 
begun  in  1878  to  cover  the  depreciation  of  the  silver  coined  with  a 
proper  reserve  of  gold  and  continued  that  policy  down  to  1890  and 
through  all  the  operations  of  the  Sherman  Act  to  1893,  gradually 
increasing  the  reserve  up  to  about  §300,000,000,  there  would  have 
been  no  apprehension  with  regard  to  the  ability  of  the  Government 
to  meet  its  demand  obligations,  even  though  it  was  compelled  to 
sell  $150,000,000  of  bonds  to  cover  the  deficit  growing  out  of  the  lack 
of  revenue. 

If  this  be  true,  then  it  is  clear  that  it  was  simply  the  expanded 
credit  and  not  the  lack  of  revenue. 

After  much  honest  and  earnest  investigation  on  my  own  part, 


19 

I  am  satisfied  that  the  lack  of  revenue  has  been  in  no  sense  the 
cause  of  the  trouble,  although  I  am  of  the  opinion  that  it  has 
served  to  scrape  the  scab  off  a  most  angry,  violent,  malignant,  and 
festering  sore  and  kept  it  a  running  one.  The  real  trouble  was  in 
a  lack  of  that  prudence  on  the  part  of  the  Goverument  that  a  good 
banker  usually  exercises  in  increasing  his  reserves  as  his  demand 
obligations  expand, 

LJLRGE  GOVKRrrMENT  RBSSBRVB  UNWTGTB. 

But  what  a  frightful  waste  this  prudent  policy  would  have  in- 
volved, the  locking  up  of  $300,000,000  of  money  for  no  other  pur- 
pose than  the  safe  conduct  of  a  most  unwise  and  foolish  policy. 
Nor  would  the  popular  will  of  the  country  remain  silent  while  so 
vast  a  sum  was  being  withdrawn  from  the  channels  of  trade  and 
the  currency  correspondingly  contracted.  This  inherent  or  con- 
stitutional evil  from  either  point  of  view  was  to  breed  discontent 
and  disast-^r. 

While  discussing  this  fundamental  difficulty,  it  may  be  well  to 
allude  to  the  objection,  that  has  been  urged  to  the  gold  cure  here 
proposed,  on  the  part  of  the  so-called  bimetallist,  but  the  more 
accurately  described  silver  monometallist,  and  that  is  an  inter- 
national bimetallic  arrangement. 

A  WORD  TO   BIMETALLTSra. 

To  these  so-called  bimetallists  I  think  we  may  confidently  say 
that  so  far  as  the  public  sentiment  of  this  country  goes  two  things 
have  been  established  beyond  all  peradventure: 

First.  That  the  American  people  are  unalterably  opposed  to  the 
free  and  unlimited  coinage  of  silver. 

Second.  That  if  this  country  hopes  to  secure  an  international 
arrangement  for  the  free  coinage  of  silver  at  any  ratio,  they  will 
be  far  more  successful  in  their  endeavor  to  do  so  if  they  place 
themselves  squarely  upon  the  gold  standard,  showing  to  all  the 
rest  of  the  world  that  there  is  absolutely  no  possibility  of  this 
country  adopting  the  free  coinage  of  silver  while  the  other  great 
commercial  nations  of  the  earth  take  all  the  gold  and  leave  ua 
nothing  but  silver.  The  way  to  reason  with  the  selfishness  of 
nations  is  to  exercise  the  power  of  compulsion,  and  the  mere 
possibility  that  this  great  country  may  in  some  moment  of  aber- 
ration adopt  the  free-coinage  fallacy  stands  in  the  way  and  will 

27ti3 


20 

do  more  to  defeat  an  international  arrangement  than  all  other 
causes  combined. 

USE  OF  METAL   SALT7TART, 

Then  there  is  another  class,  who  would  sacrifice  everything  to 
convenience,  instead  of  all  convenience  to  principle,  and  who  urge 
the  inconvenience  of  using  metal  instead  of  paper  money,  when, 
as  a  matter  of  fact,  the  salutary  effect  of  having  tHe  metal  among 
our  people  offsets  it  tenfold.  Among  these  are  even  those  who 
would  not  propose  to  have  anything  but  good  paper  money,  and 
yet  urge  the  inconsequential  consideration  of  convenience  while  a 
great  principle  is  involved,  even  the  credit  of  the  nation.  The 
question  of  convenience  can  only  be  considered  after  the  problem 
has  been  solved  upon  sound  economic  principles. 

Having  pointed  out  what  seems  to  me  to  be  the  organic  disor- 
ders, and  dissipated  the  erroneous  diagnosis  of  those  who  claim 
that  an  our  woe  is  due  to  lack  of  revenue,  and  having  pointed  out 
that  the  very  objection  of  the  theoretical  bimetallist  is  really  his 
best  if  indeed  not  his  only  hope  of  success  in  securing  an  interna- 
tional arrangement,  and  having  brushed  away  the  dewy  sugges- 
tion of  convenience,  1  think  we  have  clearly  discerned  the  true 
organic  weaknesses  from  which  we  are  suffering. 

These  being  the  fundamental  difficulties,  there  can  be  no  ques- 
tion about  the  remedies  that  have  been  suggested. 

Assuming  that  our  measure  of  value  has  been  placed  beyond 
the  reach  of  cavil  and  forever  settled,  and  our  Government  has  no 
connection  whatever  with  the  currency  of  our  countr}^  except  as 
trustee,  let  us  proceed  to  inquire  what  the  functional  trouble  is 
affecting  our  monetary  system, 

OUR   PHESENT  BANKING  ST8TBM   BAD. 

I  am  one  of  those  who  believe  that  we  have  one  of  the  best  bank- 
ing systems  in  the  world  in  some  respects,  and  who  also  believe 
that  it  is  equally  bad  in  others.  All  the  superficial  defects,  all 
the  apparent  evils,  like  eruptions  on  the  human  body,  which  are 
due  to  disorders  of  the  blood,  are  due  either  to  too  much  or  too 
little  money  to  handle  the  commerce  of  this  great  country  at  any 
given  time. 

Any  banking  system  like  our  own,  which  results  in  a  currency 
panic  in  one  city  or  several  localities  or  possibly  all  over  the  United 


21 

States  every  time  there  is  the  slightest  commotion  in  any  depart- 
ment of  commerce,  is  like  an  epileptic  patient  who  goes  into  fits 
upon  the  slightest  provocation. 

Everybody  asks,  "What  is  the  trouble?"  And  everybody  who 
has  taken  the  time  and  trouble  to  investigate  the  subject  answers, 
•'The  want  of  a  sound,  elastic  currency." 

TBUTH  AND   PATHIOTiaM,   NOT    TRADITION    AND    PREJUDICE,    SHOULD    CON- 
TROL OUR  TnOUGHTS. 

We  have  reached  a  point  in  this  matter  that  demands  patriotic 
and  heroic  action. 

Wo  should  at  once  acknowledge  evdry  established  fact  and  fol- 
low every  vein  of  truth  wherever  it  may  load,  if  happily  we  may 
find  a  solution  to  this  intricate  problem,  and  save  our  country 
from  the  stress  of  a  continual  financial  storm  and  bring  back  con- 
fidence in  us  throughout  the  world  and  secure  the  blessing  of 
prosperity  to  our  own  people. 

It  has  been  with  this  spirit  that  I  have  pursued  my  study  and 
indulged  my  thought,  which  has  stripped  me  of  some  pet  notions 
and  dislodged  many  of  my  preconceived  ideas  that  were  born  of 
political  bias  or  were  the  children  of  wishes  growing  out  of  party 
zeal  or  the  inheritance  of  some  tradition  partially  true  or  utterly 
false.  And  now,  when  I  pass  my  country  in  review  and  contem- 
plate the  stupendous  losses  and  frightful  havoc  of  recent  years,  I 
am  impelled  to  hope  that  Diogenes  may  again  appear  with  his 
candle  and  not  cease  his  search  until  he  has  found  a  clear,  frank, 
and  honest  political  platform  upon  which  the  American  people 
can  fight  this  thing  out,  as  they  are  longing  to  do. 

As  in  1858  Abraham  Lincoln  foresaw  that  this  Government 
could  not  endure  half  slave  and  half  free,  so  now  it  is  clear  that 
the  domestic  prosperity  and  commercial  supremacy  of  this  nation 
among  all  the  nations  of  the  earth  wait  alone  upon  our  unequivo- 
cal declaration  and  irrevocable  decision  as  to  our  measure  of 
value. 

OUR  PEOPLE  FAVOR  THE  GOLD  STANDARD. 

The  American  people,  strictly  honest,  highly  intelligent,  and 
supremely  brave,  are  in  favor  of  the  gold  standard  as  a  measure 
of  value  because  all  history  has  shown  it  the  most  stable  metal, 
all  experience  has  proved  it  best  suited  for  settling  the  balances 

2763 


2S 

of  trade,  and  all  the  leading  commercial  nations  of  the  earth  have 
approved  and  a  lopted  it.  And  while  our  people  are  in  favor  of 
the  use  of  so  mucli  paper  and  silver  money  as  is  consistent  with 
prudence  and  the  demands  of  business,  they  are  unalterably  op- 
posed to  the  free  and  unlimited  coinage  of  silver. 

THE  EXPERIENCE  OF  OTHERS  SHOULD   INFLUENCE  US. 

In  discussing  this  question  we  can  not  take  the  position  of  the 
schoolmaster,  the  theorist,  or  the  dogmatist;  but  with  a  full  and 
perfect  knowledge  of  our  present  currency,  our  individual  bank- 
ing system,  the  extent  of  our  country,  and  the  magnitude  of  our 
commerce,  we  siiould  attempt  the  solution  of  this  most  difficult 
problem. 

The  experience  of  other  countries,  so  far  as  they  have  established 
principles  that  are  equally  adapted  to  our  condition,  is  valuable; 
but  we  can  not  assume  that  everything  that  has  worked  well 
elsewhere  will  necessarily  work  equally  well  here.  It  is  a  ques- 
tion very  largely  of  discrimination  and  adjustment.  However,  it 
is  no  evidence  that  because  conditions  elsewhere  are  very  different 
from  our  own,  that  their  experience  is  of  no  value  to  us,  or  that 
what  has  been  well  done  there  can  not  be  equally  well  done  here. 
Common  sense  here,  almost  more  than  anywhere  else,  must  servo 
as  a  ballast  to  theory.  Prejudice  must  give  way  to  truth,  and 
selfishness  to  principle. 

▲  SUDDEN  CHANGE  UNTTISB. 

To  suppose  that  the  people  of  the  United  States  will  give  up  a 
secured  currency  in  a  day,  a  week,  a  year,  or  a  decade  even,  for  a 
credit  currency,  is  a  most  violent  presumption,  even  if  such  a  thing 
were  sound  in  principle.  Again,  even  if  they  were  willing  to  do 
so— and  credit  currency  is  sound  beyond  a  perad  venture  in  prin- 
ciple— 1  do  not  believe  that  such  a  step  would  be  wise. 

Banking  is  a  development;  it  is  the  result  of  evolution;  and  each 
of  the  great  commercial  nations  has  its  own  system  of  banking 
which  is  still  in  the  process  of  evolution.  While  our  movement 
should  be  in  the  direction  of  radical  changes,  the  movement  itself 
should  not  be  radical,  so  that  what  may  be  proposed  may  be  tested 
and  gradually  adjusted  to  the  vast  and  complicated  factors  in- 
volved in  our  commerce  and  banking. 


23 

SECURED  CURRENCY  IS  INELASTIC. 

That  any  system  of  secured  currency  does  lack  and  must  lack 
all  the  elements  of  elasticity  I  presume  no  one  here  doubts.  If, 
however,  there  are  those  who  think  that  our  system  has  ever 
responded  and  contracted  as  the  demands  of  commerce  required, 
they  have  only  to  consult  our  bank-note  circulation  by  years  and 
be  convinced  that  it  has  practically  been  controlled  by  the  nor- 
mal demand  of  money  on  the  one  hand  and  the  profit  on  the  bonds 
on  the  other,  and  has  often  been  lowest  when  it  ought  to  have 
been  highest,  ana  highest  when  it  ought  to  have  been  lowest. 
There  is  no  pretense  that  it  has  been  taken  out  every  fall  when 
the  crops  were  to  be  removed  and  has  automatically  contracted 
when  they  were  disposed  of.  It  was  $146,000,000  in  1865,  $340,- 
000.000  in  1875,  $301,000,000  in  1877,  $352,000,000  in  1883,  and 
$122,000,000  m  1830.    It  is  now  about  $200,000,000. 

A  TBITLT    ELASTIC   CURRENCY  WILL  ALWAYS    REFLECT    LOCAL    CONDITIONS 
AND  COMMERCIAL   ACTIVITY. 

No  system  of  currency  will  ever  have  the  quality  of  true  elas- 
ticity which  does  not  reflect  commercial  activity  and  which  must 
pay  a  tax  when  it  is  idle;  hence  the  normal  demand  throughout 
the  year  will  be  the  only  material  factor  affecting  the  issue. 

It  will  readily  be  seen  why  we  have  money  panics  somewhere 
nearly  all  the  time  and  everywhere  some  of  the  time.  Under  a 
properly  regulated  system  I  think  one  may  saf elj''  say  there  should 
never  be  a  currency  famine  anywhere  at  any  time. 

The  great  bulk  of  the  money,  the  normal  money,  of  any  country, 
may  be  gold,  silver,  and  secured  currency,  no  one  of  which,  nor 
all  of  which  put  together,  is  elastic.  But  to  properly  and  ade- 
quately provide  for  the  extra  demand  for  money  to  handle  crops 
and  manufactures,  to  meet  the  disturbed  conditions  in  commerce 
and  the  flurries  in  finance,  somethmg  more  is  needed  and  de- 
manded. 

THE   NATIONAL  DEBT   WILL  SOON   BE   PAID   OFF  OR   MUST   BE   FUNDED. 

Again,  it  is  admitted  that  it  will  not  be  very  long  before  tho 
national  debt  will  be  paid  off  or  much  reduced.  We  all  remem- 
ber what  consternation  there  was  throughout  the  whole  country 
about  contraction  when  President  Harrison  was  paying  off  the 
national  debt  at  the  rate  of  about  $100,000,000  a  year  during  part 

27«3 


24 

of  his  Administration.  Our  system  had  absolntely  no  power  of 
self- adjustment.  Some  were  demanding  that  we  have  State 
bonds  for  security;  some  suggested  city  bonds;  some  urged  rail- 
road bonds;  some  sought  relief  in  the  repeal  of  the  tax  on  State 
banks,  while  the  bankers  met  at  Baltimore  and  issued  the  plan 
bearing  that  name.  All  was  confusion;  all  was  chaos;  nothing 
was  done. 

Now  that  there  has  been  a  slight  increase  in  our  bonded  indebt- 
edness, some  talk  as  though  it  were  to  continue  throughout  eter- 
nity. In  the  light  of  a  surplus  revenue  of  $1,333,000,000  from  1879 
to  1889,  such  a  suggestion  is  idle  talk,  for  everybody  knows  that 
if  the  Government  were  disposed  to  do  so  it  could  wipe  out  this 
entire  debt  in  five  years,  and  that  to  distribute  the  liquidation 
over  a  period  of  ten  years  would  render  the  burden  so  light  as 
not  to  be  noticed.  Nothing  is  more  certain  than  the  absolute 
necessity  of  some  system  to  succeed  the  present  one  in  the  course 
of  time,  and  nothing  is  more  important  than  that  there  should  bo 
an  evolution  in  passing  from  one  to  the  other  and  not  a  revolu- 
tion, with  all  its  shocks,  misfortunes,  disasters,  and  ruiru 

lONORANCE  OF  TERJIS. 

As  a  preface  to  what  I  am  going  to  say,  I  will  venture  the  asser- 
tion that  you  can  not  mention  the  matter  of  credi£  money  in  any 
chance  meeting  of  a  dozen  business  men  that  some  of  them — in- 
deed, in  most  instances  a  majority  of  them— will  not  shrug  their 
shoulders  and  think  of  what  they  may  remember,  if  age  will  per- 
mit, or  what  their  fathers  have  told  them  about  "red-dog,"  '*  yel- 
low-dog," or  some  other  dog  money,  as  though  they  had  heard  or 
read  all  about  all  kinds  of  money,  when,  as  a  matter  of  fact,  all 
they  know  about  it  is  that  there  really  was  "red-dog"  money, 
and  that  the  dog  died.  Neither  the  cause  nor  the  circumstances 
surrounding  his  death  seem  ever  to  have  entered  their  minds. 

But,  discarding  the  follies  of  the  past,  let  us  inquire  into  our 
necessities  and  misfortunes  with  a  determination  of  overcoming 
them,  if  possible. 

LOANIJfQ  DEPOSITS  AND  LOANTK-a  BANK  NOTES  ARE  IDENTTCAl* 

As  a  preliminary  but  fundamental  truth,  I  suppose  all  my  lis- 
teners realize  that  there  is  not  the  slightest  difference  between  a 
bank  which  has  $100,000.capital  and  $100,000  of  deposits  subject  to 


25 

check,  with  $75,000  of  its  deposits  loaned  out  on  sixtj^-day  two- 
name  paper,  and  $25,000  reserve,  and  a  bank  which  has  $100,000 
capital  and  $100,000  of  credit  notes  outstanding,  $75,000  of  which 
having  been  loaned  to  identically  the  same  men  as  in  the  former 
case  and  on  the  same  conditions — sixty-day  two-name  paper,  with 
$25,000  of  notes  turned  into  cash  for  a  reserve  against  the  $100,000 
of  notes. 

When  there  are  abundant  deposits  there  will  be  no  notes  issued 
imder  ordinary  circumstances,  but  where  there  is  little  wealth  in 
the  form  of  money,  but  great  wealth  in  other  forms,  and  much 
money  needed  to  develop  it,  there  notes  will  be  issued. 

CITY  AND  COUNTRY  COMPARED. 

This  fact  can  be  illustrated  by  a  comparison  of  the  national 
banks  of  the  city  of  Now  York  in  1884  having  $i6,000,000  of  capi- 
tal, with  all  the  national  banks  of  the  State  of  Massachusetts,  out- 
side of  Boston,  having  $45,000,000  of  capital.  In  the  former  the 
deposits  amounted  to  $184,000,000,  and  the  banks'  circulation  was 
but  $13,200,000;  while  in  the  latter  the  deposits  were  but  $45,400,- 
000,  and  the  circulation  outstanding  was  $35,800,000 — about  three 
times  as  great. 

SUrrOIiK  SYSTKIC 

Again,  during  the  operation  of  the  Suffolk  system  at  Boston, 
which  was  before  Yankee  ingenuity  was  crystallized  into  millions, 
and  every  river,  stream,  and  rivulet  was  turned  into  a  source  ol 
wealth,  the  country  banks  had  no  deposits  to  speak  of,  and  manj 
of  them,  considering  the  inconvenience  of  travel  and  the  slowness 
of  mail,  were,  speaking  from  our  present  facilities  for  both, 
thousands  of  miles  away.  Some  of  the  Maine  banks  with  an  actual 
capital  and  downright  honesty  were,  though  more  remote  then  in 
a  business  sense  than  California  is  now,  issuing  their  notes  and 
clearing  at  Boston,  thus  enabling  the  sturdy  sons  of  that  then  far- 
off  region  to  develop  the  great  resources  of  that  section.  So  it  was 
with  nearly  all  of  New  England;  but  the  current  redemption 
which  the  system  enforced  kept  their  money  absolutely  good. 

BANK  OF  FRANCE  LOANS  ITS  NOTES. 

Allow  me  to  call  your  attention  to  the  condition  of  the  Bank  of 

France  January  1,  1895.    Its  capital  is  $36,500,000,  with  deposits, 

public  and  private,  of  $103,480,000;  its  outstanding  notes,  $701,- 

140.000.    The  amount  of  cash  on  hand  is  $636,980,000,  showing  that 
JBB3 


26 

the  bills  receivable  taken  in  for  the  notes  issued  have  been  paid 
oif  and  the  notes  are  still  outstanding. 

It  must  not  be  forgotten  in  passing  that  the  legal  note  issue, 
at  present,  of  the  bank  is  §800,000,000;  but  it  does  not  seem  to 
issue  it  and  foolishly  loan  it  just  because  it  can  do  so.  It  will  be 
observed  that  it  had  $100,000,000  still  unissued. 

Again,  it  must  be  remembered  that  there  is  not  one  dollar  of 
specific  security  for  any  part  of  the  whole  $800,000,000  issue, 
which  is  a  legal  tender  so  long  as  redemption  is  maintained.  This 
vast  issue  rests  upon  and  is  protected  by  the  bills  receivable  taken 
in  exchange  for  the  notes,  or  the  proceeds  of  those  bills  receivable 
which  have  already  been  paid  off. 

CREDIT  CURREXCY  IN  GREAT  BRITAIN. 

Great  Britain,  too,  has  her  system  of  credit  notes  and  metal 
method  of  expansion.  The  banks  of  England  and  Wales,  outside 
the  Bank  of  England,  have  the  power  to  issue  credit  money  amount- 
ing to  £4,813,400,  or  about  $35,000,000.  But  on  the  1st  day  of 
January  they  had  outstanding  only  $10,000,000,  leaving  credit 
money  to  be  issued,  if  needed,  amounting  to  $15,000,000. 

SCOTCH    BANKS. 

The  Scotch  banks  have  an  authorized  issue  of  credit  money 
amounting  to  $13,381,750,  and  on  the  1st  day  of  January  had  out- 
standing only  $0,985,675,  leaving  to  their  credit  and  unissued  about 
$7,000,000,  which  could  be  put  out  if  conditions  called  for  it. 

IRISH    BANKS. 

The  Irish  banks  have  an  authorized  circulation  of  credit  money 
amounting  to  $31,772,470,  and  on  the  1st  day  of  January  there 
was  issued  only  $15,000,000,  leaving  to  their  credit  and  unissued 
$10,772,470. 

From  these  facts  is  it  not  reasonable  to  conclude  that  the  same 
degree  of  caution  is  exercised  in  issuing  credit  notes  as  in  loaning 
the  deposits  of  the  banks?  A  careful  comparison  of  the  figures 
shows  that  on  the  1st  day  of  January,  1895,  they  had  issued  less 
than  50  per  cent  of  their  authorized  credit  circulation,  which  ag- 
gregates about  $70,000,000. 

It  must  not  De  forgotten  in  this  connection  that  we  are  now 
dealing  with  a  country  of  vast  accumulations  and  immense  bank 
deposits.    The  prudence  of  the  credit  issues  of  Great  Britain  are 

2Z4J3 


27 

certified  to  by  the  fact  that  in  Scotland,  the  home  of  the  system, 
there  have  never  been  bat  three  bank  failures  worth  mentioning. 

HBTAJL   EXPANSION   OF  THB   BANE   OF   BHQL-AJ/m. 

In  the  beginning  of  my  comment  upon  Great  Britain  I  alluded 
to  her  system  of  metallic  expansion.  The  position  of  the  Bank  of 
England  is  a  most  unique  one,  in  that  when  they  need  more  money 
or  gold  in  England,  London  being  the  clearing  house  of  the  world, 
it  is  obtained  by  simply  raising  the  rate  of  interest  to  a  point  that 
will  attract  gold  from  the  money  centers  of  the  Continent,  and 
against  this  the  issuing  department  puts  out  its  Bank  of  England 
notes, 

SUSPENSION  OF  THB   ENGLISH   BANK  AOT. 

Notwithstanding  the  various  facilities  for  meeting  exigencies, 
the  Bank  of  England,  owing  to  the  fact  that  a  limit  was  placed 
upon  its  issuing  power  by  the  act  of  1844,  which  it  was  supposed 
at  the  time  would  forever  end  all  panics,  suspended,  as  it  is 
called  over  there,  and  the  limit  set  aside  October  25,  1847,  No- 
vember 12,  1857,  and  May  12,  18G6.  In  February,  1861,  and  in 
May  and  September,  18G-1,  the  condition  became  critical  also,  while 
in  1873  the  suspension  of  the  act  seemed  certain  for  some  days.  By 
many  it  is  now  thought  that  it  was  a  mistake  to  set  a  limit,  for 
on  all  occasions  when  the  emergency  has  arisen  she  has  suspended 
the  act  and  issued  the  requisite  amount  of  money  to  meet  the 
demand. 

OERMAN  BANKINQ. 

At  the  foi-mation  of  the  German  Empire,  when  the  financial 
arrangement  was  being  adjusted,  the  English  act  of  1844  was 
largely  followed,  except  in  this  particular  power  of  issuing  credit 
money,  for  they  had  learned  by  experience  and  observation  of  the 
English  system  that  there  was  no  limit  except  that  set  by  neces- 
sity when  the  crises  recur. 

LIMIT  OF  ISSUE  PASSED, 

No  limit  was  fixed,  but  rules  and  restraints  were  established  to 
keep  it  down  to  a  certain  point — 885,000,000  marks,  or  about  $100,- 
000,000  of  money — which  was  apportioned  among  the  several  banks, 
with  the  privilege  of  passing  the  limit  if  cash  of  a  certain  descrip- 
tion was  held;  but,  having  passed  the  limit  of  issue  fixed  without 
cash  to  cover,  the  only  penalty  was  a  tax  of  5  per  cent  per  annum 
upon  the  notes  issued.    This  limit  has  several  times  been  passed 

2763 


28 

by  the  smaller  banks,  and  also  by  the  Reichs  Bank  itself,  the  in- 
stitution representing  the  Empire.  This  happened  in  the  case  of 
the  Reichs  Bank  in  December,  1881 ;  in  September  and  October, 
1882;  in  Decern Der,  1884;  in  January,  1885;  in  December,  1886,  and 
three  times  in  the  latter  part  of  1889.  The  overissue  September 
30,  1895,  was  $9,200,000;  October  7,  1895,  was  $4,100,000;  Decem- 
ber 31,  1895,  was  $29,400,000.  On  some  occasions  the  issues  were 
much  beyond  the  fixed  limit,  and  it  is  now  certain  that  in  several 
instances  the  German  community  was  saved  from  the  shock  of 
panic  and  the  spasm  of  contraction  which  would  have  been  in- 
evitable if  they  had  been  acting  under  the  English  banking  act 
of  1844. 

But  nearer  home,  even  at  our  very  doors,  we  can  find  an  apt 
illustration  of  automatic  banking  currency. 

CANADIAN  SYSTEM. 

Canada  has  no  mint  of  her  own,  but  uses  our  gold  pieces  as  her 
standard  money.  The  Canadian  system  is  founded  upon  the  Scotch 
system,  many  of  her  leading  citizens  and  most  prominent  bankers 
being  of  Scotch  origin. 

The  banking  capital  of  Canada  amounts  to  $62,196,391,  or  bears 
about  the  same  proportion  to  their  population  that  our  banking 
capital  bears  to  our  own. 

The  Canadian  banks  have  the  right  to  issue  credit  money  to  an 
amount  equal  to  their  paid-up  and  unimpaired  capital,  which  would 
be  $62,196,391.  But,  as  a  matter  of  fact,  they  have  never  exceeded 
$38,000,000,  and  the  greatest  expansion  in  any  one  year  to  move  the 
crops  was  $7,000,000,  while  January  1, 1896,  it  was  only  $32,565,179, 
about  one-half  the  limit. 

Each  of  the  banks  is  interested  in  getting  out  its  own  money, 
and  therefore  is  equally  interested  in  keeping  the  current  of  re- 
demption running  strongly  all  the  time  over  the  counters  of  all 
the  other  banks. 

It  is  a  most  striking  fact  that  while  we  are  scarcely  ever  out  of 
a  money  panic,  and  consequently  a  currency  famine,  Canada  does 
not  know  what  either  means. 

ALL  EXPERIENCE  JUSTIFIES  CREDIT  CURRENCY. 

It  would  seem  from  all  these  illustrations — the  Suffolk  system, 

the  Bank  of  France,  the  Scotch  banks,  the  Irish  banks,  the  Eng- 
2763 


29 

lish  banks,  the  German  banks,  and  tlie  Canadian  banks— we  may 
fairly  conclude  that  credit  currency  is  as  good  as  any  in  the  world, 
and,  indeed,  in  case  of  war,  when  securities  often  go  out  of  sight, 
it  is  better,  because  resting  upon  sixty-day  bills  receivable,  which 
are  almost  certain  of  payment  without  delay  or  loss,  at  least  a  very 
great  portion  of  them. 

ARE  WE  AN  INFEtllOB  PEOPLE? 

To  the  man  whose  reply  is — and  this  is  the  only  answer  to  this 
array  of  evidence — the  plan  may  work  well  in  all  the  rest  of  the 
world  but  would  not  do  for  us,  I  desire  to  say  that  such  an  ad- 
mission is  an  impeachment  of  our  civilization;  a  plea  of  guilty  to 
the  charge  that  we  are  a  violent  people:  a  confession  that  our  pru- 
dence and  money-saving  qualities  are  overshadowed  by  those  of 
every  other  nation  (which  is  not  true);  a  declaration  that  we  are 
unfit  for  self-government,  and  consequently  seK-control,  which 
more  than  a  hundred  years  of  the  most  glorious  history  of  the 
human  race  contradicts  and  rebukes. 

Would  any  man  seriously  contend  that  the  president,  cashier,  or 
board  of  directors  of  a  bank  would  be  more  foolish  in  loaning  the 
notes  of  a  bank  than  its  deposits,  when  circumstances  will  bring 
them  to  its  counter  for  redemption  with  the  certainty  and  prompt- 
ness of  the  checks  drawn  against  its  deposits? 

"But,"  said  one  of  the  Banking  and  Currency  Committee  the 
other  day,  "such  an  expansion  will  lead  to  unwise  speculations 
and  all  its  evil  consequences."  What  has  just  been  said  olearly 
shows  there  would  be  and  could  be  no  undue  expansion  of  money 
calling  for  an  immediate  metal  redemption  any  more  than  there 
is  to-day. 

CREDIT,  NOT  MONEY,  STARTS  SPECULATIONS. 

Have  you  ever  inquired  into  the  subject  of  booms  and  financial 
cataclysms  with  a  view  of  ascertaining  what,  if  any,  connection 
they  have  had  with  money — real  money — money  currently  re- 
deemed? Have  you  ever  thought  it  out  to  the  last  analysis  and 
found  that  the  increase  of  money  has  had  absolutely  no  connection 
with  the  great  speculations  throughout  the  world  during  the  past 
thirty  years,  but  that  every  one  of  them  has  been  due  to  our  gam- 
bling instinct,  encouraged  by  an  undue  expansion  of  credit  and 
invariably  long  credit? 

2763 


30 

Have  yon  ever  thonght  of  it?  There  has  been  absolutely  no 
connection  between  the  per  capita  circulation  in  the  United  States 
and  the  various  booms  and  consequent  shrinkages.  From  1865 
to  1873  our  circulation  contracted  from  $20.57  per  capita  to  $18.04 
per  capita.  In  1885  and  1898,  respectively,  our  circulation  was 
$23.02  and  $23.85  per  capita. 

Increased  circulation  had  absolutely  nothing  to  do  with  the 
Birmingham,  Dallas,  Kansas  City,  Wichita,  Omaha,  Minneapolis, 
St.  Paul,  Duluth,  Spokane,  Seattle,  Tacoma,  and  Los  Angeles 
speculations  and  reactions;  nor  a  thousand  others  in  the  United 
States  and  elsewhere. 

Increased  circulation  had  nothing  to  do  with  the  Australian 
bubble.  Increased  circulation  had  nothing  to  do  with  the  South 
American  gambles.  Increased  circulation  had  absolutely  nothing 
to  do  with  that  unlimited  buying  of  the  London  market,  from 
188G  to  1890,  when  you  could  seU  almost  anything  from  a  beer 
saloon  to  an  undiscovered  continent  in  that  market 

NINETY-TWO   PER  CENT  OF  OUn   BUSINESS  IS   DONE  BY  OHECKS  AND  DRAFTS. 

Now,  since  a  system  of  credits  in  the  form  of  checks  and  drafts 
performs  over  92  per  cent  of  our  work  and  constitutes  the  vital 
factor  in  effecting  nearly  all  our  commercial  exchanges,  and  since 
we  have  discovered  that  all  the  leading  commercial  nations  of  the 
world  have  successfully  employed  credit  money  based  upon  the 
liquid  wealth  of  commerce,  and  have  thereby  escaped  the  difficui- 
ties  and  misfortunes  necessarily  growing  out  of  an  inelastic  cur- 
rency, and  since  an  erroneously  supposed  connection  between 
currently  redeemed  credit  money  and  credit  expansion  does  not 
exist,  in  fact  that  they  bear  no  relation  whatever  to  each  other, 
have  we  not  found  a  remedy  for  our  ever-recurring  panics  and 
currency  famines? 

For  these  it  will  certainly  prove  a  specific  cure,  while  for  our 
whole  people  a  source  of  profit  and  advantage  that  can  not  be 
measured  or  comprehended  because  of  a  better  distribution  of  the 
normal  amount  of  our  money  and  a  natural,  constant,  and  ade- 
quate supply  at  every  point  where  it  is  needed  to  handle  our  prod- 
ucts or  develop  our  resources. 

Having  discovered  our  ills  and  the  proper  remedies,  it  is  our 
task,  taking  into  account  every  fact  and  condition,  to  draft  a  bill 
am 


31 

that  will  do  what  we  have  found  necessary  to  preserve  our  finan- 
cial honor  and  conserve  our  commercial  prosperity. 

EVTLS  TO   BE  OBVIATED. 

First.  We  have  seen  our  vast  national  banking  interest,  consist- 
ing of  3,712  institutions,  with  resources  amounting  to  $3,423,629,- 
343.63,  and  transacting  a  business  of  more  than  $80,000,000,000  per 
annum,  between  the  rising  and  setting  of  the  sun,  pass  from  one 
political  representative  of  one  Administration  to  that  of  another, 
when  our  banking  interests,  as  a  matter  of  fact,  should  be  free  of 
and  unaffected  by  political  caprice  or  change. 

Second.  We  have  found  that  there  is  a  possibility  of  doubt  about 
our  measure  of  value,  when  it  ought  to  be  undoubted,  unequivocal, 
uncnangeable. 

Third.  We  have  found  our  money  hoarded  by  banks  and  indi- 
viduals and  congested  in  the  financial  centers,  when  confidence 
should  take  the  place  of  fear  and  money  seek  the  channels  of  trade. 

Fourth.  We  have  found  our  Government  with  a  bonded  debt  of 
$847,362,920,  bearing,  mainly,  4  and  5  per  cent  interest,  when  it 
ought  to  be  funded  into  a  popular  loan  at  2  per  cent  as  a  basis  of 
circulation,  saving  over  $15,000,000  annually  to  our  people. 

Fifth.  We  have  found  our  Government  bound  to  redeem  an 
unlimited  amount  of  obligations,  with  no  power  to  meet  them 
except  by  taxing  the  people,  when  it  ought  to  have  no  demand 
obligations  except  current  expenses. 

Sixth.  We  have  found  our  Treasury  warehousing  $500,000,000 
of  silver,  coin  value,  when  it  ought  to  be  circulating  among  our 
people. 

Seventh.  We  have  found  our  Government  a  guarantor  of  the 
obligations  of  our  banks,  when  it  should  be  acting  only  as  trustee 
for  the  note  holders. 

Eighth.  We  have  found  eight  different  kinds  of  money  in  cir- 
culation, when  there  should  be  but  two  besides  gold  and  silver. 

Ninth.  We  have  found  a  system  of  currency  as  fixed  in  quantity 

as  the  stars,  never  varying  necessarily  with  the  months  or  the 

years  according  to  the  demand,  but  which  may  all  be  withdrawn 

to-morrow,  if  the  bonds  do  not  pay,  when  our  currency  should 

increase  and  decrease  with   the  ever- varying  exchanges  of  our 

wealth.     In  verification  of  this  it  is  well  to  observe  that  during 
27e3 


those  years  of  most  wondrous  development— from  1881  to  1890— 
our  note  issues  fell  from  $325,000,000  to  $123,000,000. 

Tenth.  We  have  seen  legitimate  commerce  and  development 
languish  because  of  the  restraint  and  high  rates  resting  upon 
money,  when  it  should  automatically  spring  into  activity  at  a 
reasonable  rate  of  interest  as  the  demands  arise  and  disappear 
when  the  work  is  done. 

THE  PROPOSED  CHANGES  \rOULD  PRODUCE  MOST  SALUTARY  RESULTS. 

That  all  these  difficulties  may  be  obviated  and  these  advantages 
secured  without  in  the  smallest  degree  disturbing  public  confi- 
dence, bringing  the  slightest  shock  to  trade  or  commerce,  or  in 
any  way  affecting  the  finances  of  the  Government  or  banking  in- 
terests of  the  country,  except  to  greatly  simplify  and  immeasur- 
ably strengthen  both,  every  frank  and  thoughtful  man  will  admit 
after  careful  consideration. 

It  has  been  to  accomplish  these  objects  that  I  have  prepared 
this  bill  which  I  now  submit  to  every  candid  thinker  without  ref- 
erence to  party  affiliations,  confident  that  his  judgment  must  at 
once  approve  its  purposes  and  will,  upon  a  thorough  and  exhaust- 
ive examination,  adopt  and  advocate  its  principles. 

Appreciating  the  breadth  and  technicality  of  the  subject,  I  shall 
venture  to  discuss  each  provision  of  the  measure  in  its  order  and 
point  out  its  purpose  and  effect. 

DISCUSSION  OF  THE  MEASURE  BY  SECTIONS. 

Be  it  enacted  by  the  Senate  and  House  of  Representatives  of  the  United  States 
of  America  in  Congress  assembled.  That  there  shall  be,  and  there  is  hereby, 
created  and  established  a  department  of  finance,  which  shall  have  entire  and 
exclusive  control  and  supervision  of  all  national  banks,  their  right  to  take 
out  secured  circulation  and  issue  their  notes. 

Sec.  2.  That  there  shall  be  three  ministers  of  finance,  who  shall  take  the 
place  of  the  Comptroller  of  the  Currency  and  constitute  a  board  of  finance; 
and  said  board  of  finance  shall  conduct  the  said  department  of  finance.  That 
said  ministers  of  finance  shall  be  appointed  by  the  President,  by  and  with  the 
advice  and  consent  of  the  Senate,  and  the  term  of  oflfice  shall  be  for  a  period 
of  twelve  years,  at  a  salary  of  $10,000  per  annum;  and  said  ministers  shall  be 
removed  only  by  and  with  the  consent  of  the  Senate  for  cause  stated  in 
writing.  That  the  term  of  the  first  three  ministers  shall  be  for  twelve,  eight, 
and  four  years,  respectively.  The  minister  appointed  for  twelve  years,  and 
his  successors,  shall  be  known  as  first  minister  of  finance,  and  he  shall  pre- 
side at  all  meetings  of  the  board  of  finance;  and  the  remaining  two  ministers 
shall  be  known  as  associate  ministers  of  finance. 

PRESENT  LAW  NOT  CHANGED. 

These  two  sections  refer  to  the  same  subject-matter,  and  while 

they  make  no  material  changes  in  the  law,  the  effect  of  them  would 
2763 


8S 

certainly  be  to  take  the  banking  interests  of  the  conntry  ont  of 
politics,  as  only  one  minister  could  be  appointed  during  each 
Presidential  Administration. 

triSDOM  AlfD  SAFETY  IN  ADVISORY  BOASD. 

Whether  under  the  supervision  of  a  single  individual,  however 
capable,  banks  have  not  been  permitted  to  drift  into  irretrievable 
ruin  on  the  one  hand  and  often  placed  in  the  hands  of  receivers 
without  warrant  on  the  other,  to  the  very  great  loss  of  all  con- 
cerned, no  one  can  ever  definitely  know.  But  inasmuch  as  the 
national  banking  act  requires  the  association  of  at  least  five  peis 
sons  to  form  a  bank,  the  Government  has  always  presumed  there 
was  wisdom  and  safety  in  a  consulting  board  as  against  a  single 
individual. 

PRESENT  CRISIS  DUE  TO  WANT  OF  WISE  GOUNSSXi. 

Indeed,  it  is  hardly  too  much  to  assume  that  if  we  had  had  such 
a  board  of  advisers,  our  present  dangers  might  not  now  threaten 
us,  for  it  is  only  after  the  horizon  of  any  man  is  widened  so  that 
he  can  comprehend  the  needs  of  the  entire  country  and  his  opin- 
ions are  ripened  and  strengthened  by  that  intelligence  which  is 
begotten  of  experience  that  his  suggestions  call  for  that  weighty 
consideration  which  may  well  determine  legislative  action. 

MINISTERS  SHOULD  BE  REMOVED  FROM  POLJTICALi  INTLiUENCS. 

So  long  as  men  hold  office  at  the  will  of  the  people  or  change 
with  party  succession  so  long  will  their  opinions  be  colored  by 
popular  sentiment  and  influenced  by  prevailing  prejudice,  pos- 
sibly a  most  salutary  influence  upon  the  usual  legislative  duties, 
but  certainly  most  harmful  to  the  judicial  determination  of  any 
question,  a  fact  that  the  fathers  of  the  Constitution  appreciated 
when  they  protected  our  Supreme  Court  against  it  by  a  life  ten- 
ure of  office. 

L.ONO  SBRVTCB  IMPORTANT  TO  USEFUIiNESS. 

Is  not  the  character  and  importance  of  the  great  department  of 
finance  of  70,000,000  people  such  as  to  make  it  imperative  that  it 
be  removed  from  any  possible  influence  springing  from  the  waves 
of  passion  that  sweep  over  the  country  during  our  national  con- 
tests? Again,  every  man  who  comes  into  the  office  of  Comptroller 
must  necessarily  bring  with  him  all  the  prejudices  of  his  environ- 
ment and  the  narrowness  of  local  conditions,  unless  happily  he 
276S-3 


34 

has  been  a  man  of  large  and  wide  experience.  It  wonld  be  most 
natural  for  him  to  think  that  the  section  from  which  he  comes  is 
the  most  important  one  simply  because  he  knows  nothing  of  any- 
other;  and  until  he  can  compare  them  all  and  view  them  as  they 
actually  are,  treating  them  with  equal  justice,  he  will  be  compara- 
tively unfit  to  fill  so  great  an  oflice.  Nor  can  any  man,  however 
clever,  hope  to  arrive  at  a  proper  appreciation  of  all  the  various 
sections  and  their  still  more  varied  interests  within  the  present 
term  of  office.  Indeed,  just  at  the  iexpiration  of  it  he  has  arrived 
at  a  point  in  information  and  experience  where  his  services  ought 
to  be  of  some  real  value  to  the  Government. 

WITH  A  LOW   SALARY  THE  OFFICE  IS  A  MERE  STEPPING   STONE  TO  POSITION. 

Nor  is  the  present  compensation  of  the  Comptroller  of  the  Cur- 
rency such  as  to  retain  any  man  of  commanding  ability  longer 
than  to  develop  an  opportunity  for  his  services  in  one  of  the  large 
financial  institutions  of  the  country;  and  bo  to-day  it  is  little  more 
than  a  stepping-stone  for  that  purpose. 

This  Government  is  entitled  to  and  ought  to  have  the  ablest  of  its 
men  in  this  most  important  department  of  public  administration. 
Most  important  of  all,  because  it  has  to  do  with  and  controls  the 
very  lifeblood  of  the  nation's  commerce  and  domestic  trade;  and  if 
we  shall  rightly  solve  this  great  financial  problem,  there  ought  not 
to  be  any  banks  of  discount  to  speak  of  operating  outside  of  the 
provisions  of  the  national-bank  act.  The  number  of  institutions 
under  the  supervision  of  the  Government  will  then  exceed  9,000, 
while  their  assets  will  soon  approach  a  ten-billion  mark.  Does 
not  common  prudence  require  that  so  vast  an  interest,  affecting 
as  it  does  the  affairs  of  every  individual  and  institution  within  our 
borders,  shall  not  be  subject  to  the  passions  of  politics,  to  the  ill 
health,  death,  or  resignation  of  a  single  individual  whose  services 
may  be  more  appreciated  by  some  corporation  than  by  the  Gov- 
ernment? 

IMPORTANCE  OF  A  CONTINUING   BODY. 

The  term  of  office  in  this  department  should  be  for  a  long  period 
of  time  and  should  not  be  subjected  to  the  caprice  of  any  Admin- 
istration which  may  happen  to  come  into  power  upon  a  wave  of 
prejudice,  which  is  invariably  given  to  a  narrow  policy,  and  is 
usually  deaf  to  the  voice  of  reason.  It  is  of  the  utmost  import- 
tance  that  those  in  charge  of  the  office  should  be  a  continuing  body, 

2763—3 


35 

80  that  the  information  and  traditions  accumulating  from  year  to 
year  shall  be  handed  down  to  the  respective  successors.  Each 
member  of  the  board,  as  he  comes  into  it,  would  be  steadied  by 
those  who  are  his  associates  and  who  have  accumulated  much 
knowledge  and  valuable  experience,  which,  through  conference,  he 
can  at  once  make  his  own.  Create  this  office  upon  these  lines, 
which  are  commensurate  with  its  character  and  responsibilities, 
and  it  will  call  for  the  ablest  of  our  men,  and  will  retain  them  if 
the  remuneration  is  such  as  to  justify  the  aacrifice  of  their  lives  to 
the  public  service. 

OBQANIZATION  OV  BANES  AND  riJNBINO  OP  DEBT. 

Sbo.  3  That  any  national  bank  now  doing  business,  or  any  otter  flnancial 
Institution  doing  a  similar  business,  or  any  number  of  persons  may.  in  ac- 
cordance with  existing  law,  so  far  as  the  same  is  consistent  with  this  act, 
organize  upon  the  following  terms  and  conditions: 

If  any  corporation  or  association  of  persons  described  as  aforesaid  shall  de- 
posit with  the  United  States  Government  any  of  the  United  States  bonda 
now  outstanding,  or  any  that  may  bs  hereafter  issued  which,  at  their  stated 
Talue  as  herein  set  forth,  (a)  shall  be  equal  to  the  required  amount  of  circu- 
lation in  the  respective  cases  specified,  (6)  the  United  States  Government 
shall  issue  to  said  corporation,  in  lieu  of  said  bonds  so  deposited.  United  States 
Government  bonds  bearing  interest  at  the  rate  of  2  per  cent  per  annum  (c) 
equal  in  amount  to  the  value  thereof,  both  principal  and  interest  of  said  new 
bonds  being  payable  in  gold  coin,  and  to  have  the  like  qualities,  privileges, 
and  exemptions  provided  by  the  act  approved  January  U.  1875.  entitled  "An 
act  to  provide  for  the  resumption  of  specie  payments*"  and  said  new  bonds 
shall  thereupon  be  deposited  with  the  United  States  Government,  and  circu- 
lation known  as  United  States  Government  bond  notes  shali  bo  issued  to  said 
corporation  n  an  amount  equal  to  the  new  bond.«»  so  deposited,  said  United 
Stat<^s  Government  bond  notes  bein^  in  denominations  of  $10  or  multiples 
thereof. 

(a)  That  the  United  States  Government  bonds  now  outstanding  shall  be 
received  at  the  following  prices,  to  wit: 

2s.  reg _ Q.  Mar.  95^ 

4s,  1907,  reg _. Q,  Jan.  109i 

fe,  1907,  coup Q.  Jan.  llOj 

4s,  1925,  reg _ Q,  Feb.  120^ 

4s,  1925,  coup Q,  Feb.  120^ 

68,  1904,  reg Q.  Feb.  113| 

5s,  1904,  coup Q,  Feb.  113| 

6s.  cur'cy,  '98,  reg :..J.  &  j.  lo^j 

6s,  cur'cy,  '99  reg J.  &  J.  105 

4s  (Cher.),  1897,  reg _ March.  103 

48  (Cher.).  1898.  reg March.  103 

4s  (Cher.).  1899,  reg „ _ March.  102 

and  that  from  and  after  the  passage  of  this  act  said  bonds  shall  be  received 
upon  the  same  incotne  basis,  respectively. 

(b)  All  banks  organized  under  this  act  shall  takeout  for  issue  United  States 

Government  bond  notes  in  proportion  to  their  respective  capital,  as  follows: 

All  banks  having  a  paid-up  capital  of  $1,000,000  and  over  shall  take  for  issue 

$500,000  of  such  notes;  all  banks  haring  a  paid-up  capital  of  $200,000  and  less 

8768 


36 

than  $1,000,000  shall  take  for  issue  an  amount  of  United  States  Government 
bond  notes  equa]  to  one-half  of  their  respective  capitals;  but  no  one  of  said 
banks  shall  take  for  issue  less  than  200,000  of  said  notes;  all  banks  having  less 
than  $200,000  of  paid-up  capital  shall  take  for  issue  an  amount  of  said  United 
States  Government  bond  notes  equal  to  their  respective  capitals,  and  each 
bank  shall  pay  into  the  United  States  Treasury  one-fourth  of  1  per  cent  per 
annum  upon  the  notes  so  taken  out  for  issue  as  a  part  of  the  fund  to  be  cre- 
ated and  known  as  "  United  States  national  bank  note  redemption  fund." 

(c)  The  first  one  hundred  million  of  said  2  per  cent  bonds  that  are  issued 
in  exchange  for  other  United  States  bonds  shall  become  due  in  1945. 

The  second  one  hundred  million  of  said  2  per  cent  bonds  that  are  issued  in 
exchange  for  other  United  States  bonds  shall  become  due  in  1^40. 

The  third  one  hundred  million  of  said  2  per  cent  bonds  that  are  issued  in 
exchange  for  other  United  States  bonds  shall  become  due  in  1935. 

The  fourth  one  hundred  million  of  said  2  per  cent  bonds  that  are  issued  in 
exchange  for  other  United  States  bonds  shall  become  due  in  1930. 

The  fifth  one  hundred  million  of  said  2  per  cent  bonds  that  are  issued  In 
exchange  for  other  United  States  bonds  shall  become  due  in  1925. 

The  sixth  one  hundred  million  of  said  2  per  cent  bonds  that  are  issued  in 
exchange  for  other  United  States  bonds  shall  become  due  in  1920. 

The  seventh  one  hundred  million  of  said  2  per  cent  bonds  that  are  issued 
in  exchange  for  other  United  States  bonds  shall  become  due  in  1915. 

The  2  per  cent  bonds  that  are  issued  in  exchange  for  the  balance  of  the 
United  States  bonds  then  outstanding  shall  become  due  in  1910. 

That  the  amount  of  United  States  Government  bond  notes  which  the 
banks  organized  under  this  act  are  required  to  take  out  for  issue  may  be 
gradually  reduced  and  retired  as  follows:  Twenty-five  per  cent  thereof  may 
be  retired  in  1910,  25  per  cent  in  1915,  25  per  cent  in  1920,  and  the  remaining  ;i5 
per  cent  in  1925. 

All  other  holders  of  United  States  Government  bonds  are  hereby  author^ 
ized  and  entitled  to  exchange  the  same  at  any  time  prior  to  January  1,  1899, 
for  the  said  new  2  per  cent  United  States  Government  bonds  upon  the  in- 
come basis  hereinbefore  set  forth. 

DOES  NOT  CHANGE  PRESENT  t.A"W. 

The  first  paragraph  in  this  section  does  not  in  any  way  alter  the 
present  law  under  which  a  national  bank  may  be  organized,  bnt 
extends  to  them,  as  well  as  all  State  banks,  the  privileges  of  this 
act. 

Banks  desiring  to  avail  themselves  of  the  advantage  of  the  act 
must  take  out  for  issue  the  amounts  of  United  States  Government 
bond  notes  specified  for  their  respective  capitals,  having  deposited 
with  the  United  States  Government  the  requisite  amount  of  the 
new  2  per  cent  Government  bonds,  which  may  be  obtained  either 
by  surrendering  a  proper  amount  of  old  bonds  at  the  schedule  price 
or  legal-tender  money  in  accordance  with  section  17  of  this  act. 

COMMUNITIES  WITH  SMALL  BANKS  NEED  MORE  NOTES. 

That  banks  of  smaller  capital  shall  be  entitled  to  take  out  a 
greater  amount  of  circulation  in  proportion  to  their  capital  is  based 
upon  the  experience  of  banks  in  the  past,  and  is  intended  to  antio- 


ipate  the  greater  needs  of  localities  where  there  is  little  wealth  in 
the  form  of  money,  banks  are  fewer,  and  capital  invariably  smaller 
than  in  the  great  financial  centers  where  the  capital  of  the  banks 
is  large  and  the  deposits  so  great  as  to  preclude  the  necessity  for 
a  corresponding  issue  of  notes. 

NO  CONTRACTION  OF  CURRENCY. 

The  schedule  has  also  been  arranged  with  a  view  of  preventing 
any  possible  contraction  of  our  present  currency;  so  that  while 
the  $346,000,000  of  greenbacks  are  retired,  they  will  be  replaced 
to  the  last  dollar  with  gold  coin,  or  United  States  Government 
bond  notes,  which,  like  the  greenbacks,  stand  upon  the  credit  of 
the  Government,  being  secured  by  United  States  Government 
bonds  payable  in  gold  coin. 

THE  GREAT  COMMERCIAL  NATIONS  HAVE  SECURED  THE  REQUISITE  AMOUNT 

OP  GOLD. 

But  it  may  be  asked  whether  there  is  ample  gold  in  the  world 
to  meet  the  requirements  of  commerce  and  trade.  Does  Great 
Britain  want  any  more?  No;  she  has  $580,000,000.  Does  France 
want  any  more?  No;  since  1873  she  has  increased  her  holding 
from  $122,500,000  to  $772,000,000.  Does  Germany  want  any  more? 
No;  the  Imperial  Bank  has  accumulated  $434,890,067  since  1875, 
and  she  has  $675,000,000.  Does  Holland,  Belgium,  Switzerland, 
Denmark,  Norway,  or  Sweden  want  any  more?  No;  they  have 
$125,000,000.  Does  Russia,  which  has  increased  its  holdings  from 
$119,000,000 in  1872 to $488,000,000  inl89G,  wantanymore?  Possibly 
$50,000,000;  certainly  not  more  than  $100,000,000.  Does  Canada 
wantanymore?  No;  she  has  $16,000,000.  Does  the  United  States, 
which  has  increased  its  holdings  from  $135,000,000  in  1873  to  $625,- 
000,000  in  1896,  want  any  more?  No.  The  only  thing  that  is  now 
wanting  to  the  United  States  is  assurance  to  the  world  that  there 
is  not  the  remotest  possibility  of  a  single  obligation  being  dishon- 
ored within  our  borders,  either  municipal,  corporate,  or  personal, 
on  account  of  a  change  in  our  standard  of  value. 

AMPLE  GOLD  IN  THE  BANKS  AND  TREASURY  TO  SUPPLY  THE  ENTIRE  BANK 
RESERVES  IN  GOLD. 

If  every  national  bank  in  the  United  States  held  its  entire  re- 
serve in  gold,  they  would  require  only  $315,068,321.  They  now 
have  $160,723,800,  and  the  United  States  Treasury  holds  $142,811,- 
118  more,  making  a  total  between  them  of  $303,535,008,  from  which 

2763 


38 

fact  it  is  clear  that  while  under  this  bill  the  national  banks,  accord- 
ing to  the  estimates  of  the  actuary  of  the  United  States  Treasury, 
would  be  required  to  hold  only  $189,000,086,  they  could  actually 
have,  if  they  preferred  to  hold  it  if  this  measure  were  in  operation, 
$:303,535,008,  and  there  would  still  be  left  for  the  remaining  banks 
in  the  United  States  $335,000,000  more,  which  would  at  once  come 
from  its  place  of  hidmg  if  this  question  were  taken  out  of  the  field 
of  debate. 

GOLD  SUPPLY. 

What  are  the  probabilities  of  the  future  supply?  From  1492 
down  to  1893,  a  period  of  four  hundred  years,  the  world  produced 
only  about  $8,000,000,000  of  gold,  of  which  about  $4,000,000,000  is 
used  in  the  form  of  money.  The  product  of  the  last  year  reached 
$215,000,000,  an  annual  rate  that  will  furnish  more  gold  in  the 
next  forty  years  than  the  world  produced  in  four  hundred  years 
prior  to  1893.  Certainly  from  such  a  showing  no  one  of  the  com- 
mercial nations  of  the  world  will  find  any  difi&culty  in  obtaining 
any  small  addition  they  may  require  to  supplement  their  present 
holdings. 

METAL  CIRCULATION  DESIRABLB. 

Why  have  no  denominations  of  bond  notes  lower  than  $10? 

First.  Because  the  presence  and  use  of  the  largest  possible 
amount  of  metal  among  the  people  exercises  a  most  salutary  in- 
fluence. 

WORK  FOR  OUR  SILVER. 

Second.  We  have  about  $500,000,000  of  silver  on  hand,  and  it 
could  be  made  to  do  the  work  of  the  one-dollar  bills,  amounting 
to  $40,960,091;  of  the  two-dollar  bills,  amounting  to  $38,348,497,  and 
of  a  large  portion  of  the  five-dollar  bills,  amounting  to  $345, 168,884, 
or  a  total  of  $314,477,372. 

THE  GOVERNMENT  DEBT  SHOULD  AND  MUST  BE  FUNDED. 

Why  fund  the  national  debt  in  long-time  2  per  cent  gold  bonds? 

First.  Because  a  very  large  portion  of  it  will  have  to  be  funded 
in  any  event  in  the  near  future,  as  it  will  come  due  at  a  time  and 
in  such  large  blocks  as  to  render  extension  necessary. 

Second.  The  debt  should  be  evenly  distributed  through  a  long 
period  of  time,  so  as  to  relieve  the  people  from  any  burdensome 
degree  of  taxation  during  any  given  year. 

Third.  By  a  statement  of  the  actuary  of  the  Treasury  Depart- 

2763 


39 

ment  prepared  for  me,  the  present  annual  interest  charge  on  tho 
Government  debt,  excluding  the  Pacific  railway  bonds,  amounts 
to  $34,387,290,  while  the  annual  interest  charge  upon  our  entire 
debt,  if  funded  into  2  per  cent  bonds,  would  amount  to  only 
$18,903,009.56,  making  an  annual  saving  to  the  people  of  the 
United  States  of  $15,484,280.44,  or  more  than  $1,250,000  per  month, 
certainly  an  item  well  worth  saving,  since  it  would  exceed  $150,- 
000,000  every  decade— quite  a  sufficient  reason  in  itself  for  funding 
the  national  debt. 

Fourth.  To  have  our  secured  circulation  based  on  so  low  a  rat© 
of  interest  as  to  preclude  such  an  appreciation  in  the  value  of  the 
bonds  as  to  lead  banks  to  dispose  of  them  and  retire  the  notes,  thus 
contracting  the  volume  of  money  and  disturbing  business  condi- 
tions. 

Fifth.  It  should  be  funded  in  gold  bonds,  because  gold  is  the 
standard  of  value  of  the  civilized  world,  and  we  can  not  afford  to 
have  a  different  standard  on  account  of  our  vast  commercial  rela- 
tions with  other  nations.  Again,  if  we  hope  to  have  the  capital 
of  the  world  flow  into  our  country  and  assist  us  in  developing  our 
resources,  the  terms  of  our  obligations  must  be  placed  beyond 
cavil  or  question.  Let  us  now  eliminate  the  last  possible  doubt 
with  regard  to  it,  and  we  shall  have  unlimited  capital  remaining 
permanently  with  us  and  at  the  lowest  rates  of  interest  in  the 
world. 

THIS  LIMITED  LEOAL-TENDER  QUALITY  IS  THE  PRESENT  LAW. 

Sec.  4.  That  said  United  States  Government  bond  notes  shall  be  a  legal 
tender  between  all  national  banks  and  shall  be  redeemed  in  gold  coin  when 
presented  for  payment  at  the  bank  of  issue. 

These  United  States  Government  bond  notes  are  redeemable  in 
gold  coin  at  the  bank  of  issue,  and  not  by  the  Government,  for  the 
following  reasons: 

First.  The  Government  should  not  be  responsible  for  them  be- 
yond the  proper  custody  of  the  guaranty  fund  and  bonds  secur- 
ing them. 

GOLD  REDEMPTION  OP  BANK  NOTES  BY  THE  BANK  OF  ISSUE  ONLY. 

Second.  These  notes,  constituting  the  great  bulk  of  our  paper 
money,  should  be  good  enough  to  pass  for  their  face  around  the 
entire  globe,  and  this  could  only  be  possible  by  making  them  re- 
deemable in  gold,  the  recognized  money  of  the  world. 

2763 


40 

Third.  They  should  be  redeemable  only  over  the  counter  of  the 
bank  of  issue,  because  they  are  as  good  as  gold,  being  secured  by 
the  gold  obligations  of  the  Government;  and  the  expense  and 
trouble  of  Government  redemption  would  therefore  be  unneces- 
sary. 

Sec.  5.  That  at  the  same  time  that  said  corporation,  if  located  in  a  reserve 
city,  shall  deposit  United  States  Government  bonds  as  aforesaid  it  shall  also 
deposit  with  the  United  States  Government  United  States  legal-tender  notes 
or  gold  certificates,  or  both,  of  such  an  amount  that  it,  together  with  the 
gold  said  corporation  has  on  hand,  will  equal  15  per  cent  of  its  deposits;  and 
the  United  States  Government  shall  deliver  to  said  corporation  gold  coin  in 
lieu  of  said  legal-tender  notes  and  said  gold  "certificates.  Said  corporation 
shall  also  deposit  at  the  same  time  with  the  United  States  Government  United 
States  Treasury  notes  or  United  States  silver  certificates,  at  the  option  of 
said  ministers,  or  both,  which,  with  the  silver  coin  then  held  by  said  corpo- 
ration, shall  amount  to  10  per  cent  of  its  deposits,  and  the  United  States  Gov- 
ernment shall  deliver  to  said  corporation  in  lieu  thereof  silver  coin  of  an 
equal  amount;  and  said  legal-tender  notes,  gold  certificates.  Treasury  notes, 
and  silver  certificates  shall  be  thereupon  canceled.  Said  corporation  shall 
thereafter  keep  as  a  reserve  25  per  cent  of  its  deposits  in  the  following  kinds 
of  money:  At  least  60  per  cent  of  said  reserve  shall  be  in  gold  coin,  and  the 
remaining  40  per  cent  of  said  reserve  may  be  in  silver  coin  or  United  States 
Government  bond  notes:  Provided,  however.  That  in  ieu  of  one-half  of  such 
reserve,  cash  on  deposit,  subject  to  check,  may  be  held  in  reserve  cities. 

Seg.  6.  That  at  the  same  time  that  said  corporation,  if  located  outside  a 
reserve  city,  shall  deposit  United  States  Government  bonds  as  aforesaid,  it 
shall  also  deposit  with  the  United  States  Government  United  States  legal- 
tender  notes,  or  gold  certificates,  or  both,  of  such  an  amount  that  it,  together 
with  the  gold  coin  said  corporation  has  on  hand,  will  equal  9  per  cent  of  its 
deposits;  and  the  United  States  Government  shall  deliver  to  said  corporation 
gold  coin  in  lieu  of  said  legal-tender  notes  and  said  gold  certificates.  Said  cor- 
I)oration  shall  also  deposit  at  the  same  time  with  the  United  States  Govern- 
ment United  States  Treasury  notes  or  United  States  silver  certificates,  at  the 
option  of  said  ministers,  or  both,  which,  with  the  silver  coin  then  held  by 
said  corporation,  shall  amount  to  6  per  cent  of  its  deposits,  and  the  United 
States  Government  shall  deliver  to  said  corporation  in  lieu  thereof  silver 
coin  of  an  equal  amount:  and  said  legal-tender  notes,  gold  certificates,. Treas- 
ury notes,  and  silver  certificates  shall  be  thereupon  canceled.  Said  corpora- 
tion shall  thereafter  keep  as  a  reserve  15  per  cent  of  its  deposits  in  the  fol- 
lowing kinds  of  money:  At  least  60  per  cent  of  said  reserve  shall  be  in  gold 
coin,  and  the  remaining  40  per  cent  of  said  reserve  may  be  in  silver  coin  or 
United  States  Government  bond  notes:  Provided,  however.  That  in  Ueu  of 
one-half  of  such  reserve,  cash  on  deposit,  subject  to  check,  may  be  held  in 
reserve  cities. 

THE  GOVERNMENT  SHOULD  GO  OUT  OT  THE  WAREHOUSE   BUSINESS. 

The  purposes  of  these  two  sections,  the  first  applying  to  banks  in 
reserve  cities,  the  latter  to  those  outside,  is  to  convert  the  demand 
obligations  of  the  Government  into  gold  and  silver  and  put  the 
metal  into  circulation  among  our  people,  or  use  it  for  reserves  of 
xhe  banks,  so  that  hereafter  all  the  reserves  of  the  banks  shall  be 
gold  and  silver  or  an  equivalent  of  gold. 

^03 


41 


CONTRACTION  IMPOSSIBLE. 

It  will  be  apparent  to  the  most  casual  observer  that  for  every 
gold  certificate,  Treasury  note,  or  silver  certificate  a  corresponding 
amount  of  gold  or  silver  will  go  out  as  they  are  retired,  and,  there- 
fore, that  no  contraction  can  take  place  on  their  account.  It 
might  possibly  be  different  in  the  case  of  retiring  the  greenbacks; 
for  if  the  Government  should  sell  bonds  and  draw  gold  coin  from 
the  banks  with  which  to  redeem  the  balance  of  the  greenbacks,  or 
about  $200,000,000  of  them,  after  allowing  for  the  $146,000,000  of 
gold  now  in  the  Treasury,  there  would  necessarily  result  a  con- 
siderable contraction.  But  this  would  not  be  necessary,  and  it 
would  not  be  done,  for  the  schedule  which  determines  the  issue  of 
the  banks  will  give  us  $435,000,000  of  United  States  Government 
bond  notes,  or  $200,000,000  more  than  we  now  have  of  national- 
bank  circulation,  the  amount  now  being  $234,000,000. 

OOL.D  IN  BANKS  AND  GOLD  REQUIRED. 

The  actual  amount  of  gold  that  all  the  national  banks  would 
require  if  60  per  cent  of  their  reserves  were  held  in  gold,  as  re- 
quired by  this  bill  would,  according  to  the  estimate  of  the  actuary 
of  the  Treasury,  reach  only  $189,000,986.  But  the  national  banks 
now  hold  $160,723,890;  therefore  the  Government  would  not  be 
called  upon  to  sell  any  bonds  for  coin,  but  would  exchange  a  large 
amount  of  them,  about  $200,000,000,  for  greenbacks  under  section 
17  of  this  act. 

IN  FUNDING  THE    DEBT  AND    RETIRING    THE    GREENBACKS    THE    NET    GAIN 
TO  THE  GOVERNMENT  WILL  BE  $11,484,280  PER  ANNUM, 

Here  we  may  probablj^  be  met  by  that  common  objection  of  the 
politician  that  the  people  are  unwilling  to  exchange  this  non- 
interest-bearing  currency,  amounting  to  $200,000,000,  for  $200,- 
000,000  of  2  per  cent  bonds.  We  have  already  shown  that  the 
Government  would  save  more  than  $15,000,000  annually  by  fund- 
ing the  debt,  from  which,  if  we  deduct  $4,000,000  on  account  of 
interest  on  the  $200,000,000  of  bonds  to  be  issued  for  the  redemp- 
tion of  the  greenbacks,  we  shall  still  have  a  net  annual  gain  of 
$11,484,280.44,  or  nearly  $1,000,000  per  month.  But  should  we 
gain  nothing  by  the  transaction,  do  we  want  to  keep  the  green- 
backs out  any  longer,  considering  the  danger  and  expense  of 

doing  so? 
87» 


€2 


DANGER  OF  DEMAND  OBLIGATIONS. 

Of  the  danger  to  which  they  constantly  subject  us  we  have  all 
now  become  aware.  Of  the  great  expense  incurred  in  maintain- 
ing them  Hon.  James  H.  Eckels,  Comptroller  of  the  Currency, 
has  advised  us  in  his  report  for  1896,  page  106,  where  the  chief  of 
the  loan  and  currency  division  of  the  Treasury  Department  fur- 
nishes the  following  detailed  statement: 

COST  TO  THE  GOVERNMENT  OF  MAINTAINING  THE  GREENBACKS. 

Cost  of  the  gold  reserve,  inclttding  liability  for  principal  of  bonds  sold  and 
interest  thereon  to  their  maturity. 

Principal  of  bonds  sold  for  resumption  purposes: 

1877  and  1878 $95,500,000 

1894 100.000,000 

1895 62.315.400 

1896 , 100.000.000 

Total  principal 357,815,400 

Interest  at  4  per  cent  on  the  average  amount  of  the  free  gold  in 
the  Treasury  from  January  1,  1879,  to  January  1,  1895 93.440,000 

451,256.400 
Interest  from  January  1,  1895,  to  July  1,  1907,  on  $95,500,000  4  per 

cent  bonds  of  1907 47,750,000 

Interest  from  January  1,  1895,  to  February  1,  1904,  on  $100,000,000 

5  per  cent  bonds 45,416,666 

Interest  from  February  1,  1895,  to  February  1,  1925.  on  $62,315,400 

4  per  cent  bonds 74,778,480 

Interest  from  February  1,  1896,  to  February  1, 1925,  on  $100,000,000 

4  per  cent  bonds 116.000,000 

Total  cost,  including  liability,  except  United  States  notes 

outstanding  7»>.20p,546 

Add  amount  of  United  States  notes  still  outstanding 346.681.016 

Total  cost  and  liability 1,081,881,563 

If  the  United  States  notes  had  been  funded  on  the  1st  day  of  January,  1879, 
into  the  thirty -year  4  per  cent  bonds  of  1907,  then  being  sold,  the  total  cost  to 
the  Government  therefor,  including  interest  from  January  1,  1879,  to  July  1, 
1907,  would  be  as  follows: 

Principal  of  bonds $346,681,000 

Interest  from  January  1,  1879,  to  July  1, 1907 395.216.340 

741.897,340 

Difference  in  favor  of  converting  the  United  States  notes  into 
bonds 339,984,222 

GOVERNMENT     ISSUES     HAVE     BEEN     DISCARDED     BY     ALL.    THE     LEADING 
NATIONS  OF  THE   WORLD, 

The  experience  of  all  nations  has  demonstrated  the  fact  that 
government  issues  of  credit  currency  are  the  most  expensive  and 
dangerous  form  of  money;  therefore  such  issues  have  been  retired 

2763 


43 

and  the  United  States  Government  is  left  in  the  grotesque  com- 
pany of  India,  Italy,  Japan,  and  Russia. 

Sec.  7.  That  the  United  States  Government  shall  not  pay  out  or  reissue 
any  United  States  legal-tender  notes  or  gold  certificates  from  and  after  the 
1st  day  of  January,  1898,  but  the  same  when  received  shall  be  canceled  and 
destroyed;  and  further,  that  the  United  States  Government  shall  not  pay 
out,  issue,  or  reissue  any  United  States  Treasury  notes  or  silver  certificates 
from  and  after  the  1st  day  of  January,  1899,  but  the  same  when  received  shall 
be  canceled  and  destroyed. 

The  preceding  section  fixes  the  dates  when  the  Government  shall 
begin  to  cancel  any  of  its  demand  obligations  as  fast  as  they  may 
come  into  its  possession,  but  the  time  is  postponed  so  that  the 
process  may  be  gradual  and  the  effect  unobserved,  the  banking 
interests  of  the  country  having  already  adjusted  themselves  along 
the  lines  laid  down  in  this  measure. 

PROVISIONS  FOR  CREDIT  CURRENOT. 

Sec.  8.  That  any  corporation  organized  under  this  act  may.  with  the  per- 
naission  and  under  the  supervision  and  control  of  the  board  of  finance,  issue 
its  own  circulation,  which  shall  be  furnished  by  the  United  States  Govern- 
ment and  be  known  as  United  States  national-bank  notes.  Said  United  States 
national-bank  notes  shall  be  issued  in  denominations  of  $10  and  multiples 
thereof,  and  shall  be  a  first  lien  upon  the  assets  of  the  bank  issuing  the  same, 
and  also  upon  the  liability  of  the  stockholders,  and  may  be  issued  only  in  the 
following  manner  and  upon  the  following  conditions: 

First.  Every  bank  Issuing  United  States  national-bank  notes  shall  at  all 
times  maintain  against  the  amount  of  such  notes  outstanding  a  reserve  cor- 
responding to  that  required  against  its  deposits. 

Second.  Any  bank  that  shall  have  complied  with  this  law  may,  with  the 
consent  and  under  the  supervision  and  control  of  the  board  of  finance,  issue 
an  amount  of  United  States  national- bank  notes  equal  to  20  per  cent  or  one- 
fifth  of  its  paid-up  and  unimpaired  capital,  and  shall  pay  upon  such  an 
amount  thereof  as  may  be  outstanding  at  any  time  a  tax  at  the  rate  of  1  per 
cent  per  annum. 

Third.  Said  bank  may  issue  a  second  amount  of  such  notes  equal  to  20  per 
cent  or  one-fifth  of  its  paid-up  and  unimpaired  capital,  and  shall  pay  upon 
such  an  amount  thereof  as  may  be  outstanding  at  any  time  a  tax  at  the  rate 
of  2  per  cent  per  annum. 

Fourth.  Said  bank  may  issue  a  third  amount  of  notes  equal  to  20  per  cent 
or  one-fifth  of  its  paid-up  and  unimpaired  capital,  and  shall  pay  upon  such  an 
amount  thereof  as  may  be  outstanding  at  any  time  a  tax  at  the  rate  of  3  per 
cent  per  annum. 

Fifth.  Said  bank  may  issue  a  fourth  amount  of  notes  equal  to  30  per  cent 
of  its  oaid-up  and  unimpaired  capital,  and  shall  pay  upon  such  an  amount 
thereof  as  may  be  outstanding  at  any  time  a  tax  at  the  rate  of  4  per  cent  per 
annunx 

Sixth.  Said  bank  may  issue  a  fifth  amount  of  notes,  equal  to  20  per  cent  or 
one-fifth  of  its  paid-up  and  unimpaired  capital  and  shall  pay  upon  such  an 
amount  thereof  as  may  be  outstanding  at  any  time  a  tax  at  the  rate  of  5  per 
cent  per  annum.  i. 

Seventh.  If  the  amount  of  United  States  national -bank  notes  issued  by  any 
bank  shall  exceed  at  any  time  the  paid-up  and  animpaired  capital  of  said 
27(i3 


u 

bank,  a  tax  at  the  rate  of  10  per  cent  per  annum  shall  bo  paid  by  said  bank  on 
such  excess. 

Eighth.  That  said  ministers  of  finance  are  hereby  authorized  and  em- 
powered to  suspend  one-half  of  said  tax  upon  any  one  or  all  of  the  said  sev- 
eral issues  of  United  States  national- bank  notes  at  any  time  after  1910,  and  at 
any  time  after  1930  said  ministers  of  finance  are  further  authorized  and  em- 
powered to  suspend  any  portion  of  the  tax  then  remaining  except  the  10  per 
cent  referred  to  in  paragraph  7. 

ADVANTAGES  TO   NEWER  SECTIONS  OF  OUR  COUNTRY. 

That  great  injustice  and  immeasurable  injury  is  being  done  to 
those  portions  of  the  United  States  which  are  only  partially  devel- 
oped, either  because  of  their  newness  or  of  adverse  conditions  such 
as  have  prevailed  in  the  South  for  a  quarter  of  a  century  by  not 
furnishing  them  ample  money  with  which  to  handle  their  prod- 
ucts, no  one  who  has  investigated  the  subject  will  deny. 

ANYTHING   FOR  RELIEF. 

The  undoubted  injustice  and  the  unquestioned  injury  prevailing 
in  all  those  sections  are  the  sole  causes  of  the  intense  feeling  which 
exists  there  and  is  impelling  the  people  to  seize  upon  anything 
that  promises  relief,  even  the  free  coinage  of  silver,  although  it 
can  be  demonstrated  that  it  would  only  make  matters  still  worse. 
But  what  else  can  they  do  when  nothing  better  is  offered  to  them 
and  they  are  convinced  that  their  conditions  could  not  possibly  be 
worse? 

The  American  people  are  confronted  with  a  desperate  movement 
upon  the  part  of  a  very  large  portion  of  our  citizens.  Shall  we 
solve  the  problem  and  give  them  a  fair  and  equal  show  with  the 
balance  of  the  country,  or  shall  we  allow  this  storm  to  gather  and 
■weep  over  us  with  all  its  devastating  consequences? 

WINDOM  ON   ELASTIC  CURRENCY. 

In  his  report  for  1890  Secretary  Windom  well  said: 

In  my  judgment  the  gravest  defect  in  our  present  financial  system  is  its 
lack  of  elasticity .  *  *  *  The  demand  for  money  in  this  country  is  so  irreg- 
ular that  an  amount  of  circulation  which  will  be  ample  during  ten  montlis  of 
the  year  will  frequently  prove  so  deficient  during  the  other  two  months  as 
to  cause  stringency  and  commercial  disaster.  The  crops  of  the  country  have 
reached  proportions  so  immense  that  their  movement  to  market  in  August 
and  September  annually  causes  a  dangerous  absorption  of  money.  The  lack 
of  a  sufficient  supply  to  meet  the  increased  demands  during  those  months 
may  entail  heavy  losses  upon  the  agricultural  as  well  as  upon  other  business 
interests. 

The  truth  of  Secretary  Windom 's  statement  is  most  vividly  por- 
trayed in  the  following  diagram,  which  proves  beyond  all  question 
of  doubt  that  there  is  absolutely  no  relation  between  our  currency 


45 

and  the  movement  of  our  crops  and  the  commercial  and  trade 
waves  of  our  country. 

The  following  diagrams  were  prepared  by  Mr.  L.  Carroll  Root, 
of  New  York: 


5           ?           S           ?           1           1                1 

10 
CO 

i 

8 

\ 
\ 

\ 

I 

s 

i 

i 

\  \ 
V  \ 

\  \ 

i 

: 

I 

1 
1 

1 

Oi 
CO 

i 

I 
i 

i 

i 

< 

a 

i 

2 

i 

6 

^ 

1 

1 
1 

i 
• 

/ 

/J 
1 

5           §           S           S           ?           1                1 

Tlie  data  given  in  the  heavy  line  are  the  statements  of  outstanding  circula- 
tion ordinarily  quoted.  They  include,  however,  notes  still  held  in  the  vaults 
and  tills  of  the  issuing  bank;  and,  to  the  extent  that  this  amount  varies  at 
different  seasons  of  the  year,  this  puts  the  circulation  on  a  different  basis 
from  the  others  described,  and  thus  vitiates  comparison.  Fortunately  we 
have  the  required  data  given  on  the  same  basis  as  in  the  other  systems  for  the 
five  dates  in  each  year  for  which  reports  are  made  to  the  Comptroller  of  the 
Currency.  This  information  is  platted  on  the  diagram  in  the  broken  Hne 
and  is  such  as  to  indicate  that  even  if  we  had  similar  figures  for  weekly  or 
monthly  periods  the  elasticity  shown  would  not  be  materially  greater. 
2763 


46 

First.  It  will  be  observed  that  the  movements  of  currency  in 

1894  and  1895,  what  little  there  was,  bore  no  relation  to  each  other; 
that  is,  the  slight  increase  in  amount  of  currency  in  1895  having 
no  counterpart  in  the  corresponding  months  of  1894. 

Second.  It  will  be  observed  that  there  was  practically  no  varia- 
tion in  the  amount  of  national-bank  notes  (see  heavy  line)  during 
the  twelve  months  of  1894,  while  an  actual  response  of  currency  to 
trade  demands  would  have  sent  the  line  indicating  the  demand  in 
the  months  of  August,  September,  and  October,  up  to  the  125 
mark,  if  indeed  not  beyond  the  very  limits  of  the  chart  itself. 

CDRRSINCT   MOVKMKXT  CONTRADICTING    NATURAL.  LAW. 

Third.  It  will  be  observed  that  the  increase  of  circulation  in 

1895  came  at  a  time  when  it  was  not  required  by  any  demand  of 
trade,  viz,  from  April  to  July,  when  indeed  it  should  be  approach- 
ing the  lowest  limit,  barring  the  simple  element  of  quarterly  div- 
idends payable  July  I.  What,  then,  was  the  cause  of  this  slight 
increase  in  circulation?  Is  it  not  clearly  explained  by  the  fact  that 
just  at  that  time  the  bond  syndicate  was  being  formed  and  the 
United  States  bonds  were  selling  at  a  price  at  which  circulation 
could  once  more  be  taken  out  at  a  profit,  even  if  trade  did  not 
demand  it.  And  yet,  when  the  crying  demands  of  the  cotton 
and  grain  growers,  the  stock  raisers,  and  the  manufacturers  como 
from  every  section  of  our  immense  domain,  asking  for  hundreds 
of  millions  with  which  to  handle  their  products,  there  is  abso- 
lutely no  way  under  our  present  system  of  currency  of  increasing 
it  to  the  extent  of  a  single  dollar. 

UtUted  States  national  banka. 


At  the  close  of — 


1894. 


Circulation. 


Per 

cent. 


Circulation. 


Per 
cent. 


January ......... 

February 

March 

April 

May 

June 

July 

Aug'ust 

September . 

October 

November  . 

December 


$207,862,107 
207, 479, 520 
207,87.5.695 
207.833.(J32 
207.245.019 
207.a53.244 
207.5;W,(H)6 
207.592.215 
207. 564,  458 
207.565.090 
206. 686. 337 
206. 605. 710 


101.4 
101.2 
101.4 
101.4 
101.1 
101.1 
101.2 
101.3 
101. 3 
101.3 
100.8 

loas 


$2a5,297,5n 
20,5,043.6.51 
207.541,211 
209.719,850 
211,478,716 
211,691,035 
211,372.045 
212,3;}9.200 
212.851,934 
213.887,630 
213. 960. 598 
213,716,873 


100 

100 

101  3 

102.3 

103.1 

103.2 

103  1 

103.5 

103.8 

104.3 

104.4 

loi.8 


47 


United  States  national  banfcs— Continued. 


Date. 


Exclusive  of  bank's  own 
notes  on  hand. 


Circulation. 


Per 
cent. 


December,  1893.. 
February.  1801 . . 

May,  1894 

July.  1894 

October.  1894.... 
December,  1894. . 

March,  1895 

May,  18<t5 

July.  1895 

September,  1895. 
December,  1895.. 
February,  1896.. 


$204, 

sni, 

200, 
198, 
30(1, 
200, 
199, 
204. 
gU'i. 
2J>8, 
2«I9. 
211. 


.581.130 
882.833 
514.419 
984. 5at 
370, 704 
391.327 
4^]().B23 
028.806 
480, 399 
066.813 
766.713 
889,750 


102.8 

101.5 

100.7 

100 

100.6 

100.7 

100.2 

102.5 

103.2 

104.5 

105.4 

106.4 


The  currency  systems  of  all  the  leading  nations  stand  out  in 
most  striking  contrast  with  those  rigid  conditions  from  which 
onr  producers  «H?e  suffering  incalculable  loss.  The  following  dia- 
grams and  tabulated  statements  clearly  indicate  in  what  months 
of  the  year  the  demand  for  currency  is  greatest  in  the  various 
countries,  and  precisely  what  it  is  at  all  times,  because  it  corre- 
sponds with  more  or  less  exactness,  according  to  the  degree  of 
elasticity,  to  the  ever- varying  requirements  of  production  and 
transportation. 

For  a  clearer  understanding  and  better  appreciation  of  each 
illustration,  the  main  features  and  peculiar  characteristics  of 
each  system  will  be  pointed  out.  Since  there  is  no  country  in 
which  crop  conditions  are  so  like  our  own  as  Canada,  attention  is 
first  called  to  the  currency  movements  there,  where  there  is  the 
fullest  play  of  expansion  and  contraction,  as  demonstrated  by  the 
fact  that  at  no  time  has  the  amount  issued  approached  the  maxi- 
mum limit. 

CREDIT  CURRENCY  IN  CANADA. 

Under  the  Canadian  law,  bank  charters  are  granted  only  where 
the  subscribed  capital  reaches  $500,000,  of  which  at  least  $350,000 
must  be  paid  up.  The  banks  may  establish  branches  and  issue 
and  reissue  notes  to  the  amount  of  their  paid-up  and  unimpaired 
capital.  These  notes  are  a  first  lien  upon  the  assets  of  the  respec- 
tive banks,  but  are  not  a  legal  tender.  They  are  issued  in  denomi- 
nations of  $5  or  multiples  thereof  and  payable  to  bearer  on  de- 
mand, and  intended  for  circulation.  The  paid-up  capital  of  the 
Canadian  banks  now  amounts  to  $62,156,255,  and  yet  the  note 
issue  averages  only  about  $30,000,000,  and  has  never  exceeded 
$38,000,000.    The  highest  point  of  their  issue  is  invariably  reached 

2763 


48 


in  October  of  each  year,  when  the  crops  are  being  moved,  as  indi- 
cated by  the  following  diagram,  covering  the  years  1894  and  1895, 


5        §       S        S       S       1             1 

"s  '"    " 

1 

o 

<: 

8 

^^ 

rl 

^ 

n 

^ 

5 

} 

> 

i 

s 

5 

J 

8 

^--^ 

1 

y 

1 

< 

t 

w 

e 
>* 

J? 

'^ 

■^ 

<• 

K 
Z 

z 
< 

1 

— 

CI 

"1 
1 

4 

> 

i 

s 

I 

\ 

S           §          5           2           2          S                  1 

Canadian  banks. 
[38  banks.] 


1894. 

Circula- 
tion. 

Per 
cent. 

1 

1895. 

Circula- 
tion. 

Per 

cent. 

$30,571,375 
30,603,267 
30,702.607 
29,996,472 
28,467,718 
30,254,1.59 
29,801,772 
30,270,366 
33,3.55,156 
34,516,651 
33,076,868 
32,375,630 

107.6 

107.8 

108.1 

105.6 

100.2 

106.5 

104.9 

106.6 

116 

121.5 

116.5 

114 

January  31 

$38,917,276 
28,815,434 
29,414,796 
29, 152. 152 
28, 429, 134 
30,106,578 
29,738.115 
30.737,622 
32,774,442 
34,671,028 
34,362,746 
33,565,179 

101.8 

February  28 

March  31  

101.5 

March  31  

103.6 

April  30 

April  30 

May  31 

102.6 

May  31 

100 

June  30 

June  30 

106 

July  31 

July  31 

104  7 

August  31.. 

Augusts! 

108.3 

September  30 

October  31 

September  30 

October  31 

115.4 
122.1 

November30 

December  31 

November  30 

December  31 

119.5 
114.7 

2763 


49 


CREDIT  CURRENCY  IN  SCOTLAND. 

Since  the  Canadian  banking  system  was  founded  largely  npoii 
the  Scotch,  it  is  most  fit  that  attention  should  be  directed  next  to 
the  banks  of  Scotland. 

Banking  in  Scotland  began  in  1695,  more  than  two  hundred 


5        §-        S        2        s        i             1 

o 

1   < 

5 

^^ 

o 

a? 

\ 

> 

21 
i 

< 

••^ 

S 

) 

s 

1 

o 

<C 

A 

y 

\ 

o 

Ik 
o 

« 

1. 

-— 

21 
-  1 

5 

< 

^, 

i 

* 
5 

12  S 
120 
(IS 
110 

IDS 
,100 

years  ago,  when  the  Bank  of  Scotland  was  chartered  with  a  paid- 
up  capital  of  $50,000.  The  country  was  poor,  and  no  deposits 
were  made  at  first,  but  the  bank  issued  its  notes  in  denominations 
of  $25,  $50,  $100,  $250,  and  $500.  From  1695  to  1845  no  limit  was 
placed  upon  the  issues  of  notes  by  the  banks.    In  1765  payment 

2763-4 


60 

of  notes  on  demand  was  made  obligatory  by  law.    Down  to  1845 
there  had  been  but  one  failure,  the  Ayr  bank. 

1.  "It  has  provided  Scotland  with  an  elastic  currency,  adapted 
to  the  condition  of  her  industries  and  adequate  in  volume  to  their 
changing  needs. " 

2.  "It  has  enabled  the  people  to  carry  on  numerous  commercial 
and  agricultural  transactions,  for  which  they  could  not  have  found 
the  necessary  quantity  of  coin,  and  has  economized  the  locking  up 
of  capital  in  the  precious  metals." 

3.  "It  has  made  the  use  of  notes  of  small  denominations  famil- 
iar and  popular,  and  has  taught  the  people  the  distinction  be- 
tween bank  notes  as  the  representatives  of  credit  and  the  precious 
metals  as  the  measures  of  value." 

4.  "It  has  brought  into  active  use  the  available  savings  and 
capital  of  the  country." 

5.  "It  has  afforded  an  opportunity  for  entering  upon  business  to 
thousands  of  poor  but  honest  men,  and  enabled  them  to  lay  the  foun- 
dation of  a  comfortable  home,  and  in  many  cases  of  a  fortune." 

6.  "It  has  convinced  the  people  so  conclusively  of  the  value 
and  safety  of  the  banking  currency  system  that  no  serious  panic 
has  ever  lasted  beyond  a  few  days,  or  has  ever  affected  any  of  the 
banks  except  those  which  were  justly  the  subject  of  distrust." 
(Conant,  Modern  Banks  of  Issue,  page  155.) 

Scotch  banks. 
[10  banks.] 


1894. 


January  27.. 
February  34. 

March  2i 

April  21 

May  19 

June  16 

July  14 

August  11... 
September  8 
October  0  .. 
Novembers. 
December  1. 
December  28 


Circula- 

Per   1 

tion. 

cent. 

£0.220,523 

101.9 

6.101,264 

100 

6.089.075 

100 

6,289.a59 

108.1 

6.809.226 

111.6 

7.093.971 

116.3 

6, 687, 6:32 

109.6 

6.4:34.985 

105.3 

6,425.971 

105. 4 

6,42:3,398 

105.3 

6, 599. 290 

108. 2 

7,289.749 

119.5  1 

6,906,079 

113.2 

January  26 

February  23 

March  23 

Apnl20 

May  18 

June  15 

July  13 

August  10 

September  7 

October  5 

November  2 

November  30 

December  28 


Circula-      Per 
tion.        cent. 


347.  434 
276. 997 
322, 469 
60.5,203 
1*5.552 
440,0:39 
095. 838 

907. 196 
(m,601 

054. 197 
191,632 
764, 561 
326,083 


104 

102.9 

103. 6 

108.3 

116.8 

122 

116. 3 

113.3 

115.4 

115.6 

117.8 

127.3 

130 


As  stated,  down  to  1844  for  a  period  of  nearly  one  hundred  and 
fifty  years  there  had  been  but  one  bank  failure  in  Scotland, 
although  banking  had  been  perfectly  free  in  point  of  issuing 

2763 


51 

notes,  and  that  failure  was  clearly  traceable  to  the  fact  that  land 
loans  had  absorbed  the  capital  which  ought  to  have  been  kept  in 
commercial  paper,  or  in  liquid  assets. 

CREDIT  CURRENCY  IN  GREAT  BRITAIN. 

The  commercial  crisis  of  Great  Britain  in  1839  called  forth  a 
discussion  that  resulted  in  the  English  bank  act  of  1844.     The 


authors  and  advocates  of  that  act  falsely  assumed  that  *' an  ex- 
pansion of  bank-note  issues  even  when  redeemable  in  coin  on 
demand  is  a  potent  cause  of  commercial  crises,"  a  theory  which 
is  now  supported  by  no  one  who  is  informed  upon  the  subject. 


^63 


08 


FIRST  SUSPENSION  Or  THE  BANK  ACT. 

Their  error  was  exposed  very  soon  after  the  passage  of  the  act 
which  was  to  be  a  cure-all  for  panics,  for  only  three  years  later 
the  crisis  of  1847  entirely  dissipated  their  theories.  It  was  then 
demonstrated  that  the  limitations  placed  upon  the  issues  of  the 
banks  throughout  Great  Britain  neither  prevented  speculation, 
which  is  the  chief  cause  of  panics,  nor  reduced  the  issue  of  notes 
to  correspond  with  the  export  of  gold,  and  the  bank  was  then 
saved  from  bankruptcy  only  by  suspending  the  act  and  resorting 
to  the  issue  of  notes  which  had  been  supposed  by  its  authors  to  be 
the  sole  source  of  past  financial  convulsions. 

The  complete  failure  of  the  act  to  prevent  commercial  crises  was 
frankly  admitted  in  the  Commons  by  Sir  Robert  Peel,  who  had 
but  three  years  before  advocated  the  measure: 

It  had  neither  "  put  a  check  on  improvident  speculation,"  in  the  language 
of  the  Lords'  committee,  nor  afforded  "  security  against  violent  fluctuations 
in  the  value  of  money."  The  law  was  framed  to  arrest  commercial  expan- 
sion by  limitmg  the  means  for  carrying  on  commercial  transactions.  It  failed 
absolutely  in  this  object,  because  such  operations  can  be  carried  on,  and  usu- 
ally are  carried  on,  by  other  means  than  bank  notes,  it  succeeding  in  check- 
ing the  expansion  only  when  other  forms  of  credit  had  been  swept  away  by 
distrust,  and  expansion  of  note  issues  to  fill  their  place  was  absolutely  needed 
to  prevent  overwhelming  commercial  disaster.  It  did  not  prevent  expansion 
when  expansion  might  do  harm;  it  prevented  it  absolutely  when  it  might 
have  done  good.    (Conant,  Modern  Banks  of  Issue,  124-125.) 

The  English  bank  act  of  1844  provided  that  the  Bank  of  Eng- 
land issue  against  securities,  including  the  Government  debt, 
Bank  of  England  notes  amounting  to  £14,000,000  ($70,000,000), 
which  it  was  thought  upon  investigation  was  the  amount  of  notes 
that  trade  and  commerce  would  require  at  all  times  when  in  a 
normal  condition,  and  therefore  might  be  uncovered.  In  addition 
to  this  amount,  notes  could  be  issued  against  any  gold  coin  which 
might  be  deposited  with  the  issue  department,  upon  the  theory 
that  the  extraordinary  requirements  of  trade  would  thereby  be 
fully  met. 

BBSERVATION  OP  CREDIT  OURRENCT. 

Fortunate  for  the  people  of  Great  Britain,  fortunate  for  the 
Bank  of  England  itself,  that  conservatism  which  has  always  been 
so  consi  icuous  a  feature  in  English  legislation  where  vested  rights 
are  involved,  saved  to  the  banks  of  Scotland,  Ireland,  and  the  joint 
rtock  banks  of  England  a  credit  circulation  of  about  $70,000,000. 

2768 


53 

So  small  is  the  territory  of  Great  Britain,  so  great  was  the 
wealth  of  that  country  even  then  in  the  form  of  money,  that  only 
about  one-half  of  this  credit  issue  is  usually  employed,  leaving 
to-day  $35,000,000  to  cover  the  necessary  expansion  when  crops 
and  manufactures  are  to  be  moved  or  public  fear  is  to  be  checked 
in  time  of  panic. 

BAISIXO  THE  BANK  RATE  TO  PROTECT  ITS  GOLD  RESERVE. 

Again  in  1857  a  crisis  compelled  the  Bank  of  England  to  sus- 
pend the  bank  act  and  prepare  to  issue  credit  notes,  to  which  rem- 
edy the  Bank  of  England  for  the  first  time  added  another  method 
of  protecting  its  reserves,  namely,  raising  the  rate  of  interest 
through  its  banking  department,  a  device  which  proved  most 
effective  then  and  has  since  been  practiced  on  many  occasions 
with  signal  success. 

GREAT   BRITAIN'S  CREDIT  CURRENCY   TOO  LIMITED. 

Whether  the  fact  that  London  is  almost  a  constant  storm  cen- 
ter of  financial  flurries,  and  that  the  Bank  of  England  changed  its 
rates  of  interest  from  1845  to  1891  three  hundred  and  fifty-four 
times,  while  the  Bank  of  France  changed  its  rates  but  one  hun- 
dred and  one  times  and  the  Bank  of  Germany  only  one  hundred 
and  thirty  times,  are  not  due  to  its  purely  arbitrary  and  mechan- 
ical structure  is  hardly  left  in  doubt  when  we  recall  the  fact  that 
every  severe  panic  in  the  London  market  has  been  checked  only 
by  a  suspension  of  the  bank  act. 

FORrEITURB  OV  ISSUES  ASSUMED  BY  THE  BANK  OV  ENGLAND. 

The  act  of  1844  further  provided  that  when  any  of  the  banks 
forfeited  their  right  of  issue  for  any  reason  the  Bank  of  England, 
by  the  permission  of  the  Crown,  could  issue  against  new  securi- 
ties two- thirds  of  the  amount  to  which  the  bank  had  been  entitled, 
the  assumption  being  that  the  other  third  had  been  covered  by 
coin.  Through  forfeiture  of  other  banks  of  issue  the  secured  cir- 
culation of  the  Bank  of  England  has  now  been  increased  to  £16,- 
800,000,  or  about  $84,000,000. 

While  the  act  does  not  clearly  state,  and  the  question  has  not 
been  settled  by  adjudication,  whether  the  Bank  of  England  notes 
are  a  first  lien  against  the  securities  and  gold  deposited  with  the 
issue  department,  they  are  a  legal  tender  everywhere  in  Great 
Britain  except  by  the  bank  itself. 


54 

Bank  of  England. 


1894. 

Circulation. 

Per 
cent. 

1894. 

Circulation. 

Per 

cent. 

Jan.     3 

£25.748.110 
25.352.155 
25.027.760 
24.573.790 
24.737.550 
^.463.840 
24.153.750 
23,948,070 
24.308.400 
24,2a5.450 
24.0:^5.930 
24.526.015 
24.477.610 
25.17:i,5R0 
2.3.030,(120 
24. 85-;.  505 
24.920.250 

25.342.485 
25.058.035 
24. 760. 880 
24.914.970 
24.971.255 
24. 916.  680 
24.833.490 
25.442.695 

107.3 

105. 6 

104.3 

102.4 

lf)3.1 

102 

100.7 

100 

101.3 

101 

100.1 

102.2 

102 

104.9 

104. 3 

IIKJ  5 

103. 8 

1116.3 

Iftj.  6 

104.4 

103.2 

103.8 

104 

103.8 

103.4 

106 

July    4 

£20.400.8.50 
26.012,910 
26.021.465 
25,813.690 
20.357,460 
26.239.695 
25.960.a->0 
25.45.5,050 
25.380.045 
25, 719.  700 
25.530.210 
25.257.935 
25.509.470 
26.363.260 
26.(X)6.545 
25.776.975 
25.430,180 
25.78:3.310 
25.508.575 
25.44:3.915 
25.111.430 
25.015.810 
25.2.57.070 
25.176.705 
25.325.105 
25.676.480 

110 

10    

^  11      

108.5 

17 

18 

108  4 

34 

25 

107.5 

31        

Aug.    1      

109.8 

Feb.     7 

109  3 

14 

15 

108.3 

21    .. 

22 

106 

28 

29 

105.  7 

MfiT      7 

Sept.  5 

107. 1 

14 

^12      : 

106  4 

21 

19 _. 

26 

105.2 

28 

106.2 

At)r.     4     . 

Oct.     3 

10 „. 

17 

109  8 

^  ii::::::::: 

108.3 

18 

107  4 

25 

24 

105  9 

>r»y    2 

31 

107.4 

^    9 

Nov.    7 

106  3 

16 

14 

106 

23 

21  

104.6 

30.  „  . 

28 ,.. 

Dec.    5 

104  2 

June    6 

105. 2 

13 

12      ..  .  . 

104  9 

20 

19 

105  5 

27 

26 

107 

1895. 

Circnlation. 

Per 
cent. 

1896. 

Circulation. 

Per 
cent 

Jan.     2 

£25.918.775 
25,519.480 
a5, 202, 515 
25.015.550 
24,926.845 
25,119.885 
24,725.820 
24,629,095 
24, 794, 165 
25,071.110 
24,893.195 
24.679.400 
25,287,16) 
26, 123, 765 
26,316.7.35 
26,018.345 
25,978,690 
26,2;J8,675 
26,213,295 
25. 796,  .580 
25, 523, 4;50 
25.840.215 
26.085.835 
25. 493. 685 
25.as4.490 
26. 101. 185 

108 

106.3 

105 

104.3 

103.9 

104. 7 

103 

102.6 

103  3 

104.5 

103.7 

102.8 

105.4 

108.8 

109:8 

108. 4 
108.2 
109.3 
109.2 
107.5 
106.3 
107.6 
108.7 
106.2 
105  8 
108.7 

July    3 

£26.309.820 
26. 672,  700 
26.420,710 
26.244.885 
26,831.660 
26.  759. 640 
26.436.975 
26.4.57.030 
26.289.815 
26.556.315 
26,310,950 
26.2:2.5.115 
25.898.520 
27.113.025 
26.762.935 
26.523,165 
26,103.565 
26. 188. 740 
26.2137.005 
25. 907. 965 
25.4439.355 
25.497.595 
25.815,040 
25,-565,960 
25. 720. 120 
26,274.190 

109  8 

9 

10  ....  : 

111  I 

16 

17 

110  1 

23 

24 

109  3 

30 

31      . 

111  8 

Feb.     6 

Aug.    7 

111  5 

13 

^  14 :.: 

110  1 

20 

21 

110  3 

27 

28 

109.5 
110  6 

Mar.    6 

Sent.  4 

13 

Jk:::::::: 

109  6 

20 

109  3 

27 

25    

107  9 

Apr.    3 

Oct.     2 

113  6 

10 

0 

111  5 

17 

16 

110  5 

24 

23 

108  8 

May    1 

30 

109  1 

^     8 

Noy.    6  .. 

109  3 

15 

13 

20 

107  9 

22 

106  1 

29 

27 

106  2 

June    5 

Dec.    4 

11 

107.6 
106  5 

12 

19 

18 

107  3 

26 

24 

109.5 

BANK  OP  ENGLAND  COMPARED  WITH  OTHER  ENGLISH  BANKS. 

To  bring  into  bolder  relief  the  very  great  difference  between 
the  currency  movements  of  banks  having  the  power  of  credit  ex- 
pansion, even  though  limited,  and  those  of  a  bank  requiring  gold 
deposits,  even  with  all  the  vast  power  of  the  Bank  of  England  to 
control  its  supply,  attention  is  called  to  the  diagram  and  tabulated 

Ji763 


55 


statement  of  the  joint  stock  banks  of  England,  most  of  which  are 
located  in  London  and  doing  business  under  the  same  conditions 
and  right  by  the  side  of  the  Bank  of  England,  making  the  com- 
parison so  fair  and  perfect  in  every  way  as  to  justify  a  most  con- 
clusive deduction  with  regard  to  the  wisdom  and  safety  of  a  credit 
currency  and  the  struggle  the  Bank  of  England  is  making  against 
a  great  natural  law. 

English  joint  stock  banks. 
[London  Bankers'  Magazine.] 


1894. 

Circulation. 

Per 
cent. 

1894. 

Circulation. 

Per 

cent. 

Jan.     6 

£1.098.126 
1,0'.«.73;> 
1,089.540 
1,074.425 
1,064.139 
1.058.919 
1, 0.54. 830 
1,042.524 
1,051.326 
1,058,281 
1,073.143 
l,099.5a5 
1,136.637 
1, 142. 008 
1,140,663 
1, 149. 4.55 
l.lt.9.068 
1.163.267 
1.148.349 
1,109.264 
1.087.872 
1.049.ti.50 
1.037.978 
1,036.388 

111.6 
111.8 
110.7 
109.2 
108.1 
107.6 
107.2 
105.9 
106.8 
107.5 
109.1 
111.7 
115.5 
116.1 
115.9 
116.8 
118.8 
118.2 
116.7 
112.7 
110.6 
106.7 
105  5 
105.3 

July    7 

£1,052.132 
1,035.806 
1,021.128 
1,008.638 
1,014.173 
l,0O5.a54 
993.857 
984,357 
985,798 
995,270 
1,005.940 
1,037.320 
1,086.655 
1,101.673 
1,097.523 
1,092.397 
1,102,562 
1,116.622 
1,112.149 
l,120.2n 
1,098.687 
l,057.a55 
1.060.383 
1,046,550 

106.9 

13 

^  14 

105.3 

20 

21 

103.8 

27 

28 

102.5 

Feb.     3 

Aug.    4 

103.1 

10 

^  11 

102.2 

17 

18 

25 

101 

24 

100 

Mar.    3      ..  .. 

Sent.  1 

100.2 

17 

^15.:::::::: 

101.1 

24 

22 

102.2 

31 

29 

105.4 

Anr.    7 

Oct.     6 

110.4 

14    ..::. 

13    

111.9 

21 

20 

111.5 

28 

27 

111 

May    5 

Nov.   3 

112 

12 

10 

ii;3.5 

19 

17 

113 

26 

24 

113.6 

JtlTlft      2 

Dec.    1 

111.7 

16 

15 

107.5 

23 

22 

107.8 

80 

29 

106.4 

1895. 

Circulation. 

Per 

cent. 

isas. 

Circulation. 

Per 
cent. 

Jan.     5 

£1.054.994 
1,057.846 
1.040.321 
1.023.970 
1,023.  (HO 
1,015.395 
1,(XX5.700 
1.001.143 
1,014.251 
1,028.  l(K) 
1.043.310 
1,08;}.  1.52 
1.125.409 
1,126.488 
1,106.936 
1,107.641 
1.13;}.  859 
1.144.689 
1.141.6J)8 
1.119.609 
1,111.536 
1,062.064 
1,044.013 
1,047,499 

107.2 

107.5 

105.7 

104.1 

103.9 

103.2 

102.2 

101.7 

103.1 

104.5 

1(J6 

110.1 

114.4 

114.5 

112.5 

112.6 

115.2 

116.3 

116 

113.8 

112.9 

107. 9 

106.1 

106.5 

July    6         

£1.060,135 

1,044,298 
1,017.6.58 
1,008,428 
1,011, 1(6 
1,004.567 
996.801 
999.430 
1,005.&50 
1,002.714 
1.015.887 
1.042.733 
1,090.758 
1, 108.  722 
1,104.596 
1.10(J.397 
1.110.181 
1,126.0;}8 
1. 127. 205 
1,130.314 
1,107.385 
1.0.53.308 
1.0.52.606 
1,040,667 

107.7 

12 

13.. 

106.1 

19  ...  . 

20 

103.4 

26 

27 

102. 5 

Feb.     2 

Aue.   3 

102.8 

9 

^  17.:::.:... 

102.1 

16 

24 

101.3 

23 

31    

101.6 

Mar.    2 

21 

102.3 

16 

101. 9 

23 

103.2 

30 

28 

105. 9 

Apr.    5 

Oct.     5 

110.8 

13 

12 

112.7 

20 

19 

112.3 

27 

26 

111.8 

May    4    . 

Nov.   2 

112.8 

^  ii::::::.:: 

9 

114.4 

18 

16 

114.7 

25 

23 

114.9 

June    1 

30 

112.5 

15 

Dec.  14 

107 

22    . 

21 

106.8 

29 

28 

105.8 

2763 


56 


IMPERIAL  BANK  OF  GERMANY. 

But  the  Imperial  Bank  of  Germany  illustrates  this  principle 
more  strikingly  even  than  the  joint-stock  banks  of  England., 

That  the  framers  of  the  German  act  were  largely  influenced  by 
many  of  the  provisions  of  the  English  bank  act  of  1844  there  can 
be  no  doubt;  but  the  differences  are  still  more  striking  than  the 


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points  of  similarity.  The  German  act,  witn  its  very  high  order  of 
tests  for  soundness,  provides  for  a  system  of  free  banking,  pure  and 
simple,  with  a  repressive  burden  in  the  form  of  a  5  per  cent  tax. 

The  notes,  which  are  not  a  legal  tender,  are  issued  against  the 
general  assets  of  the  bank,  which  remain  entirely  within  its  con- 
trol, no  part  of  them  being  set  aside  to  specially  secure  the  notes. 


67 

•'  The  law  has  simply  provided  by  suitable  measures  that  tho 
affairs  of  the  banks,  including  its  issue  of  notes,  and  the  money 
and  securities  held  by  it,  shall  meet  certain  tests  of  soundness, 
believing  that  botn  the  ultimate  solvency  of  the  bank  and  the 
prompt  payment  of  its  circulation  are  thus  made  secure.'*  (Dun- 
bar, Theory  and  History  of  Banking,  195.) 


AUTHORIZED  CIRCULATION. 

It  fixed  a  limit  of  authorized  circulation  requiring  a  reserve  of 
one-third  in  cash  or  its  equivalent,  and  that  the  other  two-thirds 
should  be  covered,  by  two-name  paper  running  ninety  days  or 
less,  and  that  all  notes  issued  beyond  the  limit  so  fixed  should  be 
covered  by  .cash.    However,  observing  that  the  want  of  elasticity 

2763 


58 

had  proven  a  constant  danger  to  the  Bank  of  England,  the  act 
provides  that  should  the  Imperial  Bank  issue  its  notes  in  excess 
of  the  limit  and  without  covering  the  same  with  gold  coin,  it 
should  simply  pay  interest  on  the  excess  of  its  notes  at  the  rate  of 
5  per  cent  per  annum. 

NOTE  ISSUES  EXCEEDING  THE  LIMIT, 

The  act  was  passed  in  1875,  and  the  first  issue  of  its  notes  sub- 
ject to  the  tax  occurred  in  December,  1881,  arid  afterwards  in  the 
following  years:  September  and  October,  1882;  December.  1886;  in 
the  latter  part  of  1889  (when  the  excess  reached  $26,000,000);  in 
1890,  1892,  and  1893. 

The  note  issues  of  the  bank  December  31,  1894,  amounted  to 
1,835,545.820  marks  ($458,886,455),  while  the  balance  due  creditors 
in  accounts  current  amounted  to  434.742,297.44  marks  ($108,685,- 
474.38),  and  the  deposits  without  interest  were  only  556,669.70 
marks  ($139,167.42). 

IMPERIAL  BANK   LOANS  ITS  NOTES  INSTEAD  OF  DEPOSITS. 

It  should  be  observed  that  for  every  dollar  of  deposits  without 
interest  at  the  Imperial  Bank  of  Germany  $3,298  of  the  bank's 
notes  are  outstanding,  making  it  essentially  a  bank  of  note  issues 
as  distinguished  from  a  bank  of  deposit;  nor  does  the  Imperial 
Bank  of  Germany  stand  alone  in  this  respect  among  all  the  great 
banks  of  the  world,  for  the  Bank  of  France  belongs  distinctly  to 
the  same  class,  as  we  shall  now  see. 

[Please  compare  this  with  the  United  States  National  Bank  Diagram.] 
Bank  of  Germany. 


1894. 

Circulation. 

Per 
cent. 

1894. 

Circulation. 

Per 

cent. 

Jan.     7 

15 

Marks. 

1.072,(555.000 

1,014,231,000 

96(J,()71,(X)0 

953,172,0<X) 

932,947,000 

920, 152,  OCX) 

892,870,000 

908.572,000 

9<J9,5:8,0(t0 

910,350,U(«1 

93.2. 0::6, 000 

1,079.798,01)0 

1,042. 123,  oa) 

995,506.000 

966. 612. 000 

l,(XJ5,8.-)8.000 

989. 634,  (KXJ 

945.  73;}.  CKX) 

920.547,000 

9:32. 898.  (KK) 

922. 948.  WK) 

917.72O.0(X» 

9r)8.66(5.0(K) 

1,109,188,000 

120.1 
113.6 

107.5 

106.7 

1(H.5 

103 

1(X) 

101.7 

101.8 

101.9 

104.  5 

120.9 

116.7 

111.5 

108.  2 

112.6 

110.8 

10.5.  9 

103, 1 

104.5 

1(J3.  4 

102.8 

107.  3 

124.2 

July    7 

15 

Marks. 

1.059,871,000 

1,01(5, 692, 0(X) 

977,t>89,(KX) 

998.004.0(X) 

980, 281.  (XX) 

966.406.0(K) 

951,45)9.010 

97.5. 346.  OIK) 

9(54.925.000 

962.  182,  (KX) 

973.  iy7,0(X) 

1. 126.4(K).00() 

1. 115.925.0(K) 

1.058. 872.  OtK) 

l,0;}().9Ol.00() 

1.078, 856, 0(K) 

l.062.6;59.(XX) 

l.a52.787.0O0 

1.036. 503. 0(K) 

1.064. 627,  CKX) 

1.040. 868.  (MXI 

1,038. 828.  (XK) 

1,079. 68-2. 0(K) 

1,211,232,000 

118.7 
114 

23 

23 

109  5 

31      -    - 

31 

Aug.   7 

111  8 

Feb.     7 

109  8 

15 

^  15 

108  2 

23 

23 

106  5 

28 

31 

Sept.  7 

109  2 

TVTnr       7       . 

108 

15       

^15 

107  6 

23 

23 

109 

31 

Apr.     7 

30 

Oct     7 

126.2 
125 

^      15 

15 

23 

Nov.^h:::::::: 

15 

23 

^        30 

Dec.    7 

15 

23 

31. 

118  5 

23 

115  4 

30 

Mav     7    

120.8 
119 

^  IS.::.::::: 

117.9 

23 

116 

31 

119  2 

June    7          .  - 

116  5 

15 

116  3 

23  

120  9 

30 

135  6 

2763 


59 

Banh  of  Germany— Continued. 


1895. 

Circulation. 

Per 

cent. 

1895. 

Circulation. 

Per 
cent. 

Jan      7 

Marks. 

1,164,040.000 

1,101, 472. 0(tO 

1,052. 922.  (HtO 

1, 0,55. 61 14, 0(  to 

1,024,074.000 

998,  4.50.0;  10 

968,210.000 

984.088.0(K) 

980. 813.  (MH) 

97:},  .571. 000 

99:}.27;J.0(K) 

1, 1.57,191, OiKt 

l,i;}0.  181,000 

1,069.  673. 0<  to 

l,041.9:}8.000 

l,095.7:i5.000 

1.074.3(11.000 

1,(151, 243,  (KIO 

1.027, 210.  (XK) 

1,060.031,000 

1,048.129,000 

l,0.-)4.5;-)7,0OO 

1.069.291.000 

1,227.712,000 

130 

123. 3 

117.9 

118.2 

114.6 

111.8 

108.  4 

110.2 

109.8 

109 

111.2 

129.5 

126.5 

119.8 

116.6 

122.7 

120. 3 

117.7 

115 

118.7 

117.4 

118 

119.7 

137.4 

July    7 

Marks. 
1.186.459,000 
1.126.670.000 
1,076, 758,  »)0 
1,09:},  49.5. 000 
1.076,173,000 
1, 0.57, 6;}9, 000 
1,040,681.000 
1,073. 886,  (X)0 
1.0ol,.5;}6,000 
1,059.9J)2.000 
1.079. 82:3.  (XK) 
1,282,764.000 
1.244, 93:},  (KK) 
l,176.7a5,000 
1.148.707,000 
1,192, 095, 000 
1,161.5:}0.000 
1.141.619.000 
1.117,608.000 
1.148.755.000 
1.093, 7:34, 0(X) 
1.087,877,000 
1.135.181,000 
1,320,089,000 

132.8 

15 

23 

31 

Feb.     7. -.....- 
15 

^  is:.:::::.: 

23 

31 

Aug.    7 

15 

23    

126  3 
120.6 
122.4 
120.5 
118.4 

23 

116.5 

28 

31 

^-'•J::::::::: 

23..- 

30 

Oct.     7 

120.2 

Mar.    7 

118.9 

15 

118.7 

2:3  .. 

120.9 

31 

Apr.     7 

15 

143.6 
139.4 

15 

131.8 

Zi 

30 

May     7 

15 

23 

31 

June    7 

15 

23 

30 

23 

31 

Nov.    7 

15 

23 

30 

Dec.    7 

15 

23 

31 

128.6 
l;33.4 
130.1 
127.8 
125.1 
128.6 
122.5 
121.8 
127.1 
147.8 

BANK  OF  FBANCB. 

The  Bank  of  France  differs  in  its  organization  from  both  that 
of  Germany  and  England.  Its  capital  is  183,000,000  francs  ($36,- 
500,000) .  and  its  note-issue  privilege  is  fixed  at  the  enormous  figure 
of  4,000,000,000  francs  ($800,000,000).  There  is  no  law  determin- 
ing how  much  specie  or  security  of  any  kind  shall  be  held  against 
the  notes  outstanding  which  are  a  legal  tender  so  long  as  the  bank 
maintains  specie  redemption  of  them.  The  notes  outstanding 
January  1,  1895,  amounted  to  3,679,215,530  francs  ($735,843,041), 
while  the  deposits,  public  and  private,  were  only  633.988,983  francs 
(§186,597,796).  But  the  cash  on  hand  was  3,304,835,974  francs 
($660,567,195),  from  which  it  is  clearly  evident  that  the  cash  was 
the  proceeds  of  notes  issued  and  still  outstanding  and  was  not 
made  up  of  deposits.  Do  not  the  conditions  and  practices  of  these 
two  last  great  banks  establish  beyond  question  in  the  minds  of 
every  frank  man  the  fundamental  truth  that  there  is  not  the 
slightest  difference  between  loaning  out  the  notes  of  a  bank  and 
loaning  out  any  deposits  it  may  have?  All  the  notes  are  just  as 
liable  to  be  presented  at  the  same  moment  of  time  as  the  deposits 
are  to  be  drawn  during  a  single  hour  of  a  day,  and  no  more  so. 
There  are  certain  conditions  that  make  the  deposits  in  the  bank 

safe.    There  are  also  certain  conditions  that  will  make  note  issues 
2763 


60 


sound,  and  the  most  important  condition,  and  I  ought  to  say  the 
essential  counterpart  of  note  issues,  is  current  redemption  in  gold 
coin  or  its  equivalent. 

Bank  of  France.  , 


1894. 

Circulation. 

Per 
cent. 

1894. 

Circulation. 

Per 
cent. 

Francs. 
3,615,2(X),000 
3,594,200,000 
3,613,700,000 
3,568,100,000 
3,611.400,000 
3,543,900,000 
3,531,100,000 
3,487,700,000 
3,529,500,000 
3,510,000,000 
3,510,200,000 
3,464,10u,000 
3,455,800,000 
3,518,800,0(X) 
3,530,900,000 
3,515,400,000 
3,472,900,000 
3,588,800,000 
3,512,000,000 
3,482,700,000 
3,438,500,000 
3,537,000,000 
3,440,100.0;)0 
3,419,600,000 
3,390,100,000 
3,399,400,000 

103.5 

107.8 

108.4 

107 

108.3 

106.3 

105. 9 

104.6 

105.9 

105.3 

ia5.3 

las.o 

103.  7 
105.6 
105.9 
ia5.5 
104. 1 
107.7 
105.4 
104.5 
103.2 
106.1 
103.2 
102.6 
101.7 
102 

July    4 

Francs. 
3,473.400,000 
3,480,800,0(X) 
3,4.55,800,000 
3,412,800,000 
3,453.000,0(X) 
3,382,100,000 
3,367,000,000 
3,325,400,000 
3, 366, 400,  (XM) 
3,365,600,000 
3,369,700,0(X) 
3, 376, 51)0,  (XX) 
3.380,600.000 
3,457,900,000 
3,471,700,000 
3, 493, 200,  (HX) 
3,455,400,000 
3,531,700,000 
3,494,000,000 
3, 509, 900.  OCX) 
3,462,400,000 
3,5053,700,000 
3,479,500,000 
3,445,700,000 
3,458.500,000 
3,483,800,000 

104.3 

10 

^11 

18        

104.4 

17 

103  7 

24 

25 

102.4 

31 

Aug.    1 

103  6 

Feb      7 

8    — 

101  5 

14 

14 

101 

21 

22 

100 

28 

29 

101 

Mar.     7 

Sept.  5 

101 

14 

^    12 

101.1 

21 

19 

101  3 

28 

26 

101.4 

Adt.     4 

Oct.     3 

103.7 

^      11 

10 

104  1 

18 

17 

104.8 

25  .  . 

24 

103.7 

May     2 

9 

31 

Nov.    7 

106 
104.8 

16 

U 

105  3 

23 

21 

103.9 

30 

28 

105.1 

June    6 

Dec.    5 

104  4 

13 

12 

103.4 

20 

19 

103.8 

27.. 

38 

104  5 

1895. 

Circulation. 

Per 

cent. 

1895. 

Circulation. 

Per 

cent. 

Jan.     3 

9 

Francs. 
3,681,500,000 
3,637,200,000 
3,659,600,000 
3,632,600,000 
3,751,800,u00 
3,634,100,000 
3,600,900,000 
3,579,600,000 
3,678,100,000 
3,606,400,000 
3,595,700,000 
3,572,200,000 
3,576,900,000 
3,626,500,000 
3,642,400,000 
3,624,300,000 
3,590,900,000 
3,628,500,000 
3,568.800,000 
3,550,500,000 
3,512,200,000 
3,549,000,000 
3,519.100,000 
3, 496. 500,  OCX) 
3,474,100,000 
3,463,200,000 

110.5 

109,1 

109.8 

109 

113.6 

109 

108 

107.4 

110.4 

108.1 

107.9 

107.1 

107.3 

108.8 

109.3 

108.7 

107.7 

108.9 

107 

106.5 

105.3 

106.5 

105.6 

104.9 

104.2 

103.9 

July    3 

10 

Francs. 
3,533,600,000 
3,500.400,CX10 
3.497,500,000 
3,424,81)0.000 
3,475,500,(K)0 
3,404,500,000 
3,379,400,000 
3,3;34,100,000 
3,342,800,000 
3,375,800,000 
3, 362, 000,  (XX) 
3,3;)3,100,000 
3,365,800,000 
3,488,6(X),0CX) 
3,486,800,000 
3, 522, 600,  OCX) 
3,483,900,000 
3,628,7(X),000 
3,533,600,000 
3,520,600,000 
3,495,200,000 
3,508.600,000 
3,505.800,000 
3,473,900,000 
3,474.600,000 
3,486,400,000 

105.7 
105  3 

16 

17 

24 

104  9 

23 

102  7 

30 

31 

104  3 

Feb.     6 

^"^-il 

102  1 

13    .. 

101  4 

20 

21 

ICX) 

27 

28 

Sept.  4 

100  3 

Mar.    6    

101  3 

13 

^  i*::::::::: 

100  9 

20 

18      .. 

100  9 

27 

25 

101 

Apr.     3 

Oct.     2 

104  7 

^      10 

9 

104  6 

17 

16 

105  7 

24 

23 

104  5 

May     1 

30 

Nov.    6 

108  9 

^     8 

106 

15  . 

13 

105  6 

22 

29 

20 

37 

104.9 
105  3 

June    5 

Dec.    4 

105  3 

12 

11 

104.3 

19 

36.  . 

18 

36 

104.3 
104  6 

NOTE  ISSUES  OF  SMALL.  BANKS. 

If,  then,  it  is  as  sound  in  principle  to  issue  notes  as  to  take  de- 
posits, it  is  as  safe  to  permit  a  small  bank  to  issue  its  notes  as  to 

g7B3 


61 


take  deposits,  therefore  the  objection  must  be  made  to  the  small 
banks'  power  to  issue  notes  on  broader  grounds  than  its  unwisdom 
in  general,  the  objection  being  equally  good  to  the  same  small  banks 
accepting  deposits  and  becoming  responsible  for  them.  But  is  not 
the  stor^^  of  all  those  little  banks  which  served  the  people  of  New 
England  so  well  under  the  Suffolk  system,  by  issuing  their  notes 


m 


? 


< 


> 
;> 

^1 


at  a  time  when  the  people  of  New  England  had  no  money  to  de- 
posit in  the  banks,  as  well  as  the  story  of  the  Scotch  banks,  cover- 
ing a  period  of  one  hundred  and  fifty  years,  issuing  their  notes 
when  the  people  of  Scotland  had  no  money  to  deposit,  and  yet  en- 
joyed a  large  use  of  the  notes  which  the  banks  issued— a  full  an- 
swer to  a  mere  opinion  without  a  fact  to  rest  upon? 

2763 


62 

KTEW  HAMPSHIRE  BANKS  UNDER  THE  SUFFOLK  STSTEM. 

For  a  thorough  understanding  and  a  proper  appreciation  of  what 
was  done  under  the  "Suffolk  system,"  I  submit  a  statement  of  the 
conditions  of  the  banks  of  the  State  of  New  Hampshire  on  the  first 
Monday  in  June,  1860.     [For  statement,  see  page  64.] 

It  will  be  observed  in  examining  this  statement  that  while  the 
capital  was  $4,991,000,  the  deposits  were  only  $1,211,551.88,  and  yet 
the  notes  issued  by  the  banks  amounted  to  $3,117,444,  and  the 
amount  of  gold  on  hand  (for  specie  then  meant  gold)  was  only 
$253,496.35,  or  only  5|  per  cent  of  the  notes  outstanding  and  depos- 
its combined.  It  must  be  remembered  in  this  connection  that  all 
the  notes  cleared  through  the  "Suffolk  system  "  were  selling  at. a 
premium  in  all  parts  of  the  United  States,  and  therefore  the  people 
of  New  Hampshire  actually  enjoyed  the  use  of  the  amount  of  the 
notes  issued,  $3,117,444,  or  nearly  three  times  the  amount  of  the 
deposits,  and  that  the  notes  served  identically  the  same  purpose 
that  the  same  amount  of  deposits  would  have  done. 

CAPACITY  OF  OUR   PRESENT  BANKS  OPERATING   UNDER  A  SIMILAR  LAW. 

Comparing  what  the  banks  of  New  Hampshire  then  did  with 
what  some  of  our  States  might  do  to-day  under  the  provisions  of 
this  bill,  it  will  be  found  that  if  the  money  were  demanded  and 
the  credit  of  those  wishing  to  borrow  were  good,  the  banks  of  Vir- 
ginia, out  of  their  own  resources,  without  borrowing  money  in 
New  York  or  any  other  money  center,  could  furnish  her  people 
with  $12,217,416;  the  banks  of  Georgia  could  furnish  her  people 
with  $16,548,905;  the  banks  of  Mississippi  could  furnish  her  peo- 
ple with  $4,521,325;  the  banks  of  Texas  could  furnish  her  people 
with  $28,678,850;  the  banks  of  Iowa  could  furnish  her  people  with 
$43,156,321;  ttie  banks  of  South  Dakota  could  furnish  her  people 
with  $4,696,164;  the  banks  of  the  State  of  Washington  could  fur- 
nish her  people  with  $17,438,200;  the  banks  of  California  could 
furnish  her  people  with  $59,800,205,  and  so  on  through  the  entire 
list  of  States.  But  I  will  content  myself  with  representative 
States  in  different  sections  of  the  country.  That  this  could  be 
done  with  absolute  protection  to  the  note  holders  and  entire  safety 
to  the  banks  is  verified  by  the  experience  of  the  banks  included  in 
the  "  Suffolk  system." 

EXPANSION    OF    CURRENCY    UNDER    THE    SUFFOLK    SYSTEM    AND    COST    OP 
REDEMPTION. 

"  The  circulation  of  the  New  England  banks  in  1858  was  less  than 
$40,000,000,  and  the  redemptions  for  that  year  through  the  Suffolk 

S7(t3 


63 

Bank  were  $400,000,000.  Every  note,  therefore,  on  the  average, 
passed  through  the  redemption  agency  ten  times  a  year,  or  a  little 
less  often  than  once  a  month .  This  frequency  of  redemption  not  only- 
tested  the  solvency  of  the  banks  by  the  ultimate  test  of  a  banking 
currency,  but  it  kept  the  circulation  constantly  adjusted  to  busi- 
ness conditions.  The  redemptions  through  the  Suffolk  agency 
were  $76,248,000  in  1834  and  increased  to  $105,457,000  in  1837. 
There  were  fluctuations  during  the  period  of  specie  suspension, 
but  the  redemptions  increased  progressively  to  §137,000,000  in  1845, 
$230,000,000  in  1850,  and  $341,000,000  in  1855,  until  they  reached 
their  maximum  of  §400,000,000  in  1858.  The  expenses  of  carrying 
on  the  redemption  agency  reached  a  maximum  of  $40,000  in  1858, 
making  an  average  expense  of  10  cents  per  $1,000  (or  one  one-hun- 
dredth of  1  per  cent,  or  one- tenth  of  1  per  cent  per  annum).  The 
suspension  of  specie  payments  by  the  banks  of  the  counti-y  at  the 
close  of  18(51,  as  the  result  of  Secretary  Chase  s  issue  of  Govern- 
ment demand  notes,  arrested  the  regularity  of  redemptions  through 
the  Suffolk  system,  and  was  superseded  before  resumption  by  the 
national  banking  system.  The  Suffolk  system  was  never  sus- 
tained by  formal  law,  but  it  maintained  New  England  bank  cur- 
rency for  a  generation  at  a  par  with  gold,  and  prevented  any  losses 
to  note  holders  larger  than  a  fraction  of  1  per  cent  of  the  entire 
volume  of  circulation." 

In  the  face  of  all  this  evidence  I  do  not  believe  that  anyone  will 
have  the  hardihood  to  deny  the  safety  and  wisdom  of  ingrafting 
upon  our  banking  system  this  right  of  note  issue,  safeguarded  in 
the  outset  as  this  bill  provides. 

GRADUAL  ADOPTION. 

It  will  be  observed  that  precaution  has  been  taken  to  replace  all 
of  the  United  States  notes  with  gold  and  United  States  Govern- 
ment bond  notes,  so  that  no  part  of  our  present  money  shall  be 
displaced  by  bank  notes  until  the  system  has  been  fully  tried  in 
supplj'ing  the  extra  amount  of  circulation  that  may  be  required 
to  move  the  crops  or  products  in  every  part  of  the  country,  or 
meet  any  monetary  crisis.  Since,  then,  the  money  in  circulation 
to-day,  if  properly  distributed,  would  approximately  meet  the 
normal  demand,  the  introduction  of  this  system  into  our  financial 
operations  must  necessarily  come  gradually,  and  will  also  be 
steadied  by  the  graduated  tax,  and,  in  addition,  be  under  the  con- 
stant supervision  of  the  ministers  of  finance. 

27t)3 


84 


A  statement  of  the  condition  of  the  several  banJcs  in  New  Hampshire  as  they 

and  18,  chapter  IW,  of  the  revised  statutes  of 


Name  of  bank  and  place  of  business. 


Amoskeag,  Manchester 

Ashuelot,  Keene 

Bank  of  New  Hampshire,  Portsmouth... 

Bank  of  Lebanon,  Lebanon 

Belknap  County,  Laconia 

Cochecho.  Dover 

City,  Manchester 

Claremont,  Claremont 

Citizens',  Sanbornton 

Connecticut  River,  Charlestown 

Cheshire,  Keene 

Cheshire  County,  Keene 

Carroll  County,  Sandwich 

Derry,  Derry 

Dover,  Dover — 

Farmington,  Farmington 

Francestown,  Francestown 

Farmers  and  Mechanics,'  Rochester 

Granite  State,  Exeter 

Great  Falls.  Somersworth 

Indian  Head,  Nashua 

Lake,  "Wolfboro 

Langdon.  Dover 

Mechanicks',  Concord ._ 

Merrimack  County,  Concord...... 

Manchester,  Manchester 

Mechanics  and  Traders',  Portsmoutli... 

Monadnock.  Jaffrey 

Merrimack  River,  Manchester 

Nashua,  Nashua - 

New  Ipswich,  New  Ipswich . .... 

New  Market.  New  Market. 

Piscataqua  Exchange,  Portsmouth 

Pawtuckaway,  Epping 

Pittsfield,  Pittsfleld 

Peterboro,  Peterboro 

Pennichuck,  Nashua 

Pine  River,  Ossipee - 

Rochester,  Rochester 

Rockingham,  Portsmouth 

State  Capital,  Concord 

Salmon  Falls,  RoUinsford 

Strafford,  Dover 

Sugar  River.  Newport 

Souhegan.  Milford 

Somersworth.  Somersworth 

Union,  Concord 

Warner,  Warner 

Weare,  Hampton  Falls 

Winchester,  Winchester 

White  Mountain,  Lancaster — 

Total 


Amount 
of  capital 

stock 
actually 
paid  in. 


$200,000 

100,000 

150,000 

100,000 

80,000 

100,000 

150,000 

100,000 

50,000 

100,000 

100,000 

100,000 

50,000 

60,000 

100,000 

75,000 

60,000 

60,000 

100,000 

150,000 

150,000 

75,000 

100,000 

100,000 

80,000 

125,000 

141.000 

50,000 

150,000 

125,000 

100,000 

60,000 

200,000 

50,000 

50,000 

50,000 

100,000 

50,000 

80,000 

200,000 

150,000 

50,000 

120,000 

50,000 

100,000 

100,000 

100,000 

50,000 

50,000 

100,000 

50,000 


4,941,000 


Amount 
of  debts 
due  the 
bank  se- 
cured by 
pledges  of 
its  stock. 


$14,300.00 

None. 
5,169.53 
1,500.00 

None. 

400.00 
1,150.00 
3,700.00 

None. 

None. 

None. 

None. 

None. 

500.00 

400.00 
1,500.00 

None. 

200.00 

6a5.00 
4,513.25 

None. 

500.00 


None. 

None. 

None. 

None. 

None. 
4, 325. 00 

None. 

700.00 

None, 

None. 

600.00 

None. 

None. 
1,375.00 

None. 

None. 
1,050.00 
1,500.00 

None. 
2,550.00 

None. 

580.00 
3,025.00 
4,950.00 

None. 
1,938.81 

None, 

None. 


57,585.58 


Value  of 

real  estate 

belonging 

to  the 

bank. 


None. 
$3,500.00 

None. 
2,800.00 

None. 
4,244.51 
4,366.83 

None. 
94,373,71 

None, 
4,000.00 
3,300.00 

500.00 
1,500.00 
6,000.00 
3,385.82 

None, 

None. 
4,000.00 
3,439.74 

None. 
1,050.00 
4,304.98 
1,200.00 
2,465.00 

None. 

None. 

None. 
3,173.37 

None. 
1,000.00 

None. 

400.00 

None, 
2,835.55 

None, 

None, 

500.00 
1,200.00 
5,000.00 

None, 
2,594.11 
4,500.00 

None. 
1,276.08 

None, 

None, 

None. 

None. 
3,300.00 
1,000.00 


75,725.98 


o  On  interest,  h  Including  $2,000  in  capital  stock,  Bank  of  Mutual  Redemp- 
tion, c  including  $^3,000  in  capital  stock,  Bank  of  Mutual  Redemption,  d  §200 
interest,  in  advance;  $100  on  interest,  e  Interest  disbursed,  f  Interest  ad- 
vanced, g  Interest  paid  in  advance,  h  Including  §1,200  in  capital  stock.  Bank 
of  Mutual  Redemption,  i  Including  stock  in  Bank  of  Mutual  Redemption. 
3  $992.04  interest,  paid  in  advance;  $150  on  interest. 
2763 


65 


existed  on  the  first  Monday  of  June,  18G0,  made  in  conformity  to  sections  tt 
New  Hampshire,  approved  December  23,  181*2. 


Amount 

of  all  debts 

Amount 

of  all  debts 

due  to  the 

bank. 

due  from 
directors, 
either  as 
principal 
or  sure- 
ties, speci- 
fying: 
whether 
on  inter- 
est or 
otherwise. 

Amount 

of  specie 

in  the 

vault. 

Amount 
of  bills  of 

other 

banks  on 

hand,  and 

checks. 

Amount 
of  deposits 
in  the  bank. 

Amount 
of  deposits 

in  other 
banks  for 

the  re- 
demption 
ofitsbills. 

Amoxmt 
of  the 
bills  of 
the 
bank 
then  in 
circu- 
lation. 

$344,273.85 

$3,560.00 

$5,999.79 

$5,883.00 

$49,984.76 

$38,687.26 

$133,829 

149,913.03 

a  3, 100. 00 

4,339.85 

4,289.00 

14,212.44 

22,000.75 

61,045 

230,340.65 

2,119.29 

9,194.33 

3,540.39 

43,804.33 

6, 453. 63 

44,133 

168,44(1.43 

a  500. 00 

15,331.30 

1,535.00 

15,831.63 

34,874.69 

89,745 

136,303.46 

a  310. 00 

4,671.04 

2,536.95 

13,531.55 

13,531.55 

76,554 

170,019.08 

a  251. 71 

2,556.a3 

2,169.00 

36,684.70 

611,330.03 

41,273 

210.383.95 

850.00 

1,694.61 

1,900.00 

13,330.81 

27  013.06 

72,227 

180,697.33 

a  355. 00 

4,730.85 

1,168.00 

22,876.40 

c9,191.28 

64,000 

94,373.71 

d300.00 

2,373.03 

1,635.50 

10,501,87 

14, 914. 10 

47,563 

161,888.00 

c  3, 050. 00 

4,100.00 

400.00 

6,316.18 

2,840.00 

50,316 

173,438.30 

4,339.50 

5,035.00 

21,014.22 

14,139.39 

69,681 

170,570.41 

"/'I'iso.'oo' 

5,213.35 

1,070.33 

19,918.20 

10,500.43 

67,616 

75,350.09 

2,542.27 

3,i;i3.18 

3,839.00 

73.00 

6,443.03 

35,258 

95,767.87 

^1,200.00 

3,753.47 

1,697.00 

9,119.30 

/i  5, 105. 46 

34,706 

181,343.41 

0  800.00 

2,770.30 

2,814.00 

18,038.47 

16,316.60 

76,429 

113,3.50.37 

790.00 

1,939.30 

561.00 

11,267.23 

11,690.47 

38,188 

111.384.99 

None. 

2,565.50 

3,609.00 

10,975.55 

c  18, 398. 28 

55,506 

90,430.81 

/1, 770. 00 

2,950.15 

606.00 

1,874.71 

ill,  272. 88 

41,333 

165,854.67 

7  1,142.04 
fcl,000.00 

6,319.67 

3,970.00 

33,870.69 

39,613.64 

78,057 

214,619.53 

3,909.93 

1,424.00 

13,308.77 

11,895.23 

62,840 

255,570.62 

None. 

7,413.43 

3,478.00 

29,491.74 

c  28, 204. 06 

97,338 

136,270.47 

g  1,105.  77 

2,764.19 

55.00 

7,951.12 

7,494.96 

59,250 

183,634.90 

1,386.30 

3,877.24 

2,874.74 

23,336.64 

14,542.84 

72, 776 

221.073.45 

None. 

10,364.31 

6,151.00 

57,99().60 

31,654.38 

97,233 

155,351.94 

None. 

12,813.41 

7,813.37 

54,067.30 

44,860.04 

66,630 

288, 798. 64 

g3,500.00 

4,058.76 

4,517.00 

74,833.49 

71,672.57 

106,967 

292.306.79 

None. 

8,703.07 

2,566.53 

96,087.49 

19,842.13 

61,063 

83, 730. 87 

212.50 

4,528.89 

1, 746. 90 

11,840.53 

23,106.40 

44,591 

235,004.67 

3,347.14 

4,918.00 

34,288.50 

c 21, 595. 33 

64,636 

253,304.27 

None. 

13,405.95 

427.00 

26,293.31 

13,626.73 

100,918 

134,973.43 

300.  fK) 

4,994.35 

750. 19 

10,02:3.69 

36,788.81 

63,378 

153,713.93 

f^  1,203. 00 

3,240.53 

316.00 

49,079.50 

618,381.93 

59,238 

282,306.05 

7,333.00 

7,764.31 

2,o;m.16 

66,790.31 

30, 733. 92 

51,316 

83,500.14 

g  1,9.51. 66 

2,643.68 

2,311.34 

9,195.21 

Z  4, 940. 21 

30,386 

89,938.53 

a  750. 00 

2,686.59 

2,800.00 

5,939.15 

12,237.65 

43,883 

98,950.31 

a7(X).00 

2,896.35 

2,807.80 

11,730.71 

10,012.37 

48,109 

153,048.18 

/  200. 00 

2.806.97 

4,089.00 

21,316.33 

24,742.23 

56,509 

101.180.06 

m  534.  .59 

1,538.24 

22,3.00 

ll,CCe.47 

64,136.00 

44,119 

118.674.38 

None. 

3,089.13 

7, 46;].  00 

5,430.93 

5, 575. 35 

47,538 

33iO,  144. 17 

None. 

7,093.90 

945.30 

47,133.35 

18,276.98 

67,144 

245,86.3.00 

a  1,750. 00 

9,281.36 

4,756.93 

25,959.67 

28,133.39 

99,691 

75,611.67 

g 153. 00 

1,849.97 

935.00 

'  9,909.11 

11, 935. 56 

26,988 

217,044.98 

a  1,404.87 

3,680.89 

4,899.75 

48, 6.54.  as 

38,318.S9 

73, 166 

94.680.66 

None. 

4,043.95 

500.00 

1,837.33 

3,301.84 

45,000 

144,501.17 

/1, 89.5. 43 

3,a50.88 

3,461.33 

6,761.45 

c  18, 818. 98  • 

63,919 

146,070.53 

ol,316.30 

2,500.88 

1,511.50 

9,785.49 

67,019.11 

40,910 

203, 708. 63 

3 1,506. 00 

11.538.68 

5.314.00 

63,553.93 

c  22, 855. 02 

79,773 

99.101.79 

200.00 

2,855.74 

15,989.06 

10,953.53 

3,256.15 

43,920 

67, 730. 93 

7,400.00 

1,901.94 

354. 00 

2,390.13 

7i  7, 407. 33 

23,521 

144,891.66 

a  4, 777. 39 

4, 718. 44 

5,531.91 

3,785.76 

5,154.37 

57,117 

77,030.08 

a  1,720. 50 

5,550.40 

6,500.30 

3,110.50 

5,300.80 

41,080 

4,330,918.68 

1 

65,981.61 

353,498.35 

150,390.97 

1,311,551.88 

911,199.47 

3,117,444 

7c  S70()  also  as  surety;  $;500  on  interest,  in  advance.    I  Including  S1,000  capital 
stock,  Bank  of  Mutual  Redemption.    ?u  $319.19  on  in t«rest:  8:215  not  on  interest. 
State  of  New  Hampshire,  Secretary  of  State's  Office,  June  15,  1S60. 
The  abave  is  a  true  statement  of  the  condition  of  the  saveral  banks  in  this 
State  as  returned  to  this  office. 

Attest:  THOMAS  L.  TULLOCK,  Secretary  of  State. 

276^-5 


68 


THE  COXDrXTONS  OF  OUR   COUXTRY    DEMAND    TT. 

Let  us  now  speak  of  its  adaptation  to  our  conditions  and  needs 
and  the  advantages  that  must  necessarily  come  to  ns  from  its 
adoption. 

First.  As  to  our  condition  and  needs,  it  is  to  be  observed  that  a 
comparison  of  our  condition,  domain,  commerce,  and  population 
with  those  of  the  countries  mentioned  clearly  establishes  the  fact 
that  if  an  elastic  currency  has  proved  of  an  inestimable  advan- 
tage to  them,  it  would  be  of  a  still  greater  benefit  to  us.  For, 
owing  to  our  immense  products  at  great  distances  from  our  finan- 
cial centers,  more  particularly  in  our  partially  developed  sections, 
it  becomes  absolutely  necessary  that  the  local  banks  provide  money 
by  e^jpressing  bills  of  lading  and  the  notes  of  oar  merchants  and 
farmers  to  the  great  commercial  centers  and,  borrowing  money 
upon  them,  ship  it  out  to  the  various  sections  thousands  of  miles 
away,  and  when  our  crops  and  products  are  marketed,  ship  the 
money  back  to  the  far-off  centers  and  express  the  notes  and  other 
collateral  home  again.  What  wo  do  in  this  line  of  business  is 
without  a  parallel  anywhere  in  the  civilized  world. 

Lingering  prejudice  may  breed  pernicious  and  unfounded  sus- 
picions, but  experience,  common  sense,  reason,  and  justice  plainly 
point  the  way. 

IN    PRIXCII'LE  Af.L  SECTIOXS  ARE  STMILAULT  SITUATTO. 

Second.  What  advantages  will  uecessarily  follow  the  adoption 
of  this  system  in  this  country  may  be  more  clearly  seen  by  some 
concrete  illustration.  Choose,  if  you  will,  the  city  of  New  Orleans, 
tho  cotton  center  of  the  South;  or  Kansas  City,  handling  the  varied 
crops  o''  the  central  West;  or  Fargo,  lying  in  the  lap  of  our  great- 
est wheat  region  in  the  central  North;  or  Seattle,  struggling  with 
the  diversified  products  of  the  great  Northwest;  or  Los  Angeles, 
unab'e  to  handle  the  golden  fruits  of  southern  California  for  the 
want  of  an  adequate  currency;  and  what  is  true  of  these  greater 
centers  is  etiually  true  of  every  community  having  banking  facili- 
ties throughont  the  entire  length  and  breadth  of  our  country. 
Certainly  it  will  not  be  denied  that  the  notes  and  bills  of  lading  in 
the  banks  of  New  Orleans,  or  any  other  city,  are  just  as  good 
security  there  for  the  redemption  of  any  notes  the  banks  them- 
selves may  issue  as  they  are  tied  ux)  in  bundles  and  held  in  New 

JS763 


67 

York  City  for  the  security  of  the  currency  that  may  bo  shipped 
South.  The  amount  of  money  used  in  either  case  would  be  the 
same;  the  amount  of  security  the  same. 

WHAT   A    DANK    ACTUALLY    DOES  TO   GET  CUriRENCT. 

Then  what  is  the  difference?  Lot  us  see.  A  New  Orleans  bank 
which  has  a  capital  of  $500,000  ties  up  in  a  bundle  $125,000,  or 
perharps  §150,000,  of  its  best  notes- and  ships  them  to  its  New  York 
correspondent,  and  borrows,  if  perchance  there  is  no  panic  on, 
$100,000  of  money,  paying  on  an  average  about  6  per  cent  per  an- 
num for  it,  and  loans  it  out  to  move  the  cotton  crop  in  its  section. 
As  it  must  pay  the  express  two  ways  on  the  $150,000  of  discounts 
or  notes  and  the  express  two  ways  on  the  $100,000  borrowed,  the 
producers  of  the  South  must  pay  anywhere  from  8  to  10  per  cent 
for  the  money,  and  should  do  so.  considering  the  risks  and  what 
it  costs  the  bank,  for  we  must  remember  that  the  banking  busi- 
ness pnys  no  great  return  upon  the  capital  engaged  in  it.  The 
repoit  of  the  Comptroller  of  the  Currency  shows  that  the  average 
earnings  of  all  the  national  banks  of  the  United  States  were  only 
5  per  cent  for  the  year  ending  March  1,  1895,  and  5.4  per  cent  for 
189G,  which  is  a  low  rate,  considering  the  risks  involved  in  the 
double  liability  of  stockholders. 

Some  of  our  people  seem  to  think  tliat  national  banks  are  favored 
institutions.  That  this  is  a  mistaken  idea  and  that  its  advantages, 
if  any,  are  open  to  all  of  our  people  alike,  lot  me  call  your  atten- 
tion to  the  following  facta: 

O.N-LY    ONE-TUIUr)   OF   OCR    BANKS   ARE   NATIONAL. 

First.  If  the  national  banks  aro  si)ecially  favored,  why  do  not 
the  sev«raJ  thousand  trust  companies,  State  banks,  and  private 
banking  firms  organize  at  once  under  that  lawr  There  are  out 
8,671)  national  banks,  while  there  are  5,708  State  baJiks. 

Second.  No  one  who  is  a  conservative  adviser  ever  suggests 
national-bank  stock  to  the  widow  or  aged,  or  those  with  limited 
means,  because  the  risk  in  holding  it  is  so  great. 

Tliird.  The  shares  are  only  $100  each,  so  that  any  frugal  person 
may  invest  in  the  stock  of  a  national  bank  if  he  desires  to  do  so. 

Fourth.  We  must  not  forget  that  if  banking  under  a  national- 
bank  charter  was  so  mucli  more  profitable  than  any  otJier  busi- 
2Tej 


ness.  men  of  means  stand  ready  at  all  times  to  engage  in  it,  bringing 
the  profits  down  to  or  below  the  level  of  all  other  investments. 

DEMAGOGUES  TAKE  ADV^AXTAGE  OF  IGNOKA>^CE  TO  AHOUSE  PREJUDICE. 

This  suspicion  or  misapprehension  that  the  Government  is  ex- 
tending through  the  national  banks  to  some  one  something  that 
everybody  else  can  not  get  has  given  birth  to  a  kind  of  prejudice— 
the  child  of  ignorance— excited  an  unwarranted  jealousy,  and 
developed  a  groundless  opposition  in  some  localities  to  a  system 
that  has  raised  the  standard  of  banking  in  this  country  and  pro- 
vided the  American  people  with  a  currency  as  sound  as  any  in  the 
world,  and  calling  for  the  admiration  of  all  civilized  nations. 

Now,  recuiTing  to  the  special  matter  in  hand,  let  us  suppose 
that  this  same  New  Orleans  bank,  with  its  $500,000  capital,  was 
organized  under  this  bill.  What  could  it  have  done  under  the 
section  now  being  discussed? 

WHAT  A  BANK  MIGHT  DO  UNDER  THIS  MEASURE. 

The  bank  need  not  tie  up  and  ship  away  $150,000  of  its  best 
securities,  but  keeping  them  m  its  own  safe  issue  $100,000  of  its 
own  notes  at  a  cost  of  1  per  cent  per  annum  instead  of  6  per  cent. 

Will  it  be  necessary  to  state  that  this  difference  of  5  per  cent  in 
the  two  instances  will,  every  penny  of  it,  amounting  to  $5,000  on 
every  $100,000  loaned,  come  out  of  the  merchants,  farmers,  or 
producers,  and  practically  all  of  it  out  of  the  farmers  or  pro- 
ducers? Again,  we  should  not  fail  to  observe  that  the  tax  paid  on 
the  circulation  goes  into  the  United  States  Treasury  to  help  pay 
the  expenses  of  the  Government,  and  to  that  extent  the  people 
will  be  relieved  of  taxation. 

FARMERS  AND  PRODUCERS  "VrrLL  REAP  TUB  ADVANTAGE. 

Will  anyone  seriously  urge  that  any  portion  of  this  heavy  charge 
will  be  borne  by  the  bankers?  Nor  will  anyone  at  all  familiar 
with  the  laws  of  trade  doubt  that  the  people— farmers  and  pro- 
ducers—will ultimately  get  every  farthing  of  the  advantage 
gained,  for  competition  would  very  soon  bring  the  bankers'  share 
of  profit  to  a  fixed  limit,  not  varymg  much  from  its  present  mar- 
gin, thus  saving  to  the  people,  the  producers  of  our  country- 
farmers  and  laborers— anywhere  from  1  to  5  per  cent  per  annum 
upon  the  capital  borrowed  to  carry  on  the  commerce  of  the 
country. 
2763 


69 

The  valne  of  our  finished  product,  it  will  be  remenlberea,  now 
annually  exceeds  $12,000,000,000. 

Mr.  Edward  Atkinson,  the  statistician,  has  estimated  that  in  the 
transformation  from  the  unmined  coal  and  iron,  the  unbroken 
forest,  and  the  fallow  fields  to  ihe  homes  in  which  we  live,  th« 
things  we  wear,  and  tnose  we  eat,  there  are  at  least  three  transfers 
of  this  vast  property,  or  $36,000,000,000  passing  from  man  to  man. 
Is  it  not  reasonable  to  suppose  that  at  least  two- thirds  of  this 
amount  is  handled  with  borrowed  capital?  If  so,  even  if  the  loans 
ran  but  sixty  days  and  1  per  cent  can  be  saved  on  this  two-thirds, 
or  $24,000,000,000,  the  people— the  producers — will  be  the  gainers 
by  $240,000,000  every  year,  or  more  than  two-thirds  of  all  the  green- 
backs still  outstanding.  Shall  we  not  cancel  them  if  we  can 
more  than  make  up  for  them  in  every  succeedmg  year,  to  say 
nothing  of  the  frightful  loss  they  are  entailing  upon  the  country 
every  month,  and  the  danger  to  which  the  Government  is  sub- 
jected because  of  them? 

Let  the  reader  estimate  what  the  gain  to  the  producers  would 
be  if  the  loans  on  this  $24,000,000,000  ran  six  months!  What  if 
they  ran  for  the  year?    More  than  $1,000,000,000! 

FALSE  ASSUMPTIONS  SHOULD  BE  DISCARDED. 

Is  it  not  a  mere  fetich  to  hang  on  to  the  greenbacks,  then,  de- 
ceived by  the  hallucination  that  the  Government  can  make  some- 
thing out  of  nothing,  when  it  has  been  proved  in  this  case,  as  in 
all  others,  that  mistakes  and  falsehoods  only  lead  to  misfortune 
and  disaster?  If  the  experience  of  all  other  great  commercial 
nations  added  to  tliis  ratal  delusion  is  not  convincing  enough  to 
detei-mine  our  action  now,  we  shall  simply  have  to  wait  to  be 
taught  by  more  bitter  lessons  still,  and  more  crushing  disasters, 
what  has  already  been  demonstrated  beyond  the  shadow  of  a 
doubt. 

EQUALIZATION  AND  LOWERING  OF  RATES. 

Under  the  operation  of  this  provision  of  the  bill  there  is  still 
another  object  to  be  attained  that  is  founded  in  justice  and  con- 
serves the  welfare  of  the  people  in  all  portions  of  our  country 
alike.  It  is  the  equalization  of  the  rates  of  interest  in  every  sec- 
tion of  the  land,  from  Niagara  Falls  to  the  Gulf,  from  Cape  Cod 
to  the  Golden  Gate.    Wherever  there  is  banking  capital,  a  de- 

2763 


70 

mand  for  money,  and  an  equally  abundant  supply  of  equally  good 
commercial  two-name,  thirty,  sixty,  and  ninety  day  paper,  there 
the  rates  snould  and  will  oe  practically  the  same. 

Rates  of  interest  will  not  then  be,  as  now,  particularly  low  in 
one  locality  because  there  is  considerable  wealth  in  the  form  of 
money  and  securities,  and  particularly  high  in  another  notwith- 
standing there  is  abundant  wealth  in  the  form  of  cotton,  com, 
cattle,  wheat,  and  the  various  other  products  of  the  earth  simply 
because  it  awaits  a  better  day  for  disposition  or  sale.  The  ques- 
tion will  not  then  be  so  much  whether  it  is  stocks  and  bonds  on 
the  one  hand  and  cotton  and  corn  on  the  other  as  whether  it  is 
good  liquid  wealth  in  some  form— cattle,  nogs,  corn,  cotton,  and 
wheat  being  regarded  as  good  wealth,  as  quick  assets,  if  only  the 
banks  have  the  facilities  tor  carrying  them. 

OBJECT  OF  GRADUATED  TAX. 

It  will  be  observed  that  the  tax  imposed  upon  the  circulation  is 
an  increasing  graduation.  The  object  is  to  give  it  a  repressive 
effect  just  in  proportion  as  the  expansion  increases  under  the  vary- 
ing pressure  from  the  crop  movement  to  the  demands  of  an  acute 
and  general  panic. 

The  same  principle  is  illustrated  in  the  5  per  cent  tax  imposed 
upon  the  credit  circulation  of  the  German  banks  whenever  it  passes 
a  certain  limit. 

It  is  also  illustrated  in  the  operations  of  the  clearing  houses  of 
New  York,  where  they  charge  6  per  cent  upon  clearing-house  cer- 
tificates, and  in  Boston,  where  they  charge  7  per  cent  upon  them, 
confident  in  all  these  instances  that  the  tax  will  compel  the  retire- 
ment of  the  issues.  So  far  this  system  has  worked  perfectly,  the 
retirement  of  the  circulation  following  quickly  upon  the  disap- 
pearance of  the  cause. 

UNITED  STATES  NATIONAL  BANK  NOTE  REDEMPTION  FUND. 

Sec.  9.  That  all  taxes  so  paid  to  the  Government  upon  said  Uni  ted  States 
Government  bond  notes  and  said  United  States  national-bank  notes  shall 
constitute  and  be  known  as  the  *•  United  States  national-bank  note  redemp- 
tion fund,"  and  be  held  exclusively  for  the  redemption,  first,  of  the  United 
States  Government  bond  notes;  second,  for  the  United  States  national-bank 
notes  in  the  event  of  the  liquidation  ot  any  bank  organized  under  this  law: 
Prvvided,  however.  That  when  said  '*  redemption  fund  "  shall  exceed  5  per 
cent  of  botn  the  United  States  Government  bond  notes  and  the  United  States 
national-bank  notes  such  excess  shall  belong  to  the  United  States  Govern- 
ment and  may  be  used  by  it  to  defray  its  general  expenses. 
2708 


71 

For  a  better  understanding  of  the  above  section  from  the  stand- 
point of  actual  experience  I  herewith  submit  a  tabulated  state- 
ment showing  the  total  circulation,  amount  of  notes  of  failed 
banks  for  each  year  since  the  system  was  established,  and  the 
percentage  they  bear  to  the  total  circulation  for  each  year: 


Year  ending  October  31— 

Total  cir- 
culation. 

Circula- 
tion 
of  failed 
banks. 

Per  cent 
of  the  cir- 
culation 
of  failed 

banks 
to  the  to- 
tal cir- 
culation. 

1863 

1864        

$58,813,980 
201,635,205 
293,086,959 
299,094,824 
300.116,958 
299. 724, 791 
301.859,275 
324.475.207 
340.990.825 
348,347,674 
348.785.9(»6 
343.176.018 
319.867.070 
315. 871. 190 
319.&10.560 
325.120.018 
342,048,322 
aT8.924,9(J2 
360,982.713 
.350. 759, 675 
332,452,944 
314.872.928 
300,990,506 
271.651.587 
23!),  044, 822 
201,744,089 
179,449,958 
171,978,673 
172,0;)l),921 
208,701,189 
207, 140, 104 
213.491,147 
234,437,572 

1865 

$44,000 
2J)5.000 
248.900 
321,800 
45,000 
129,700 

0  03 

1866  ....„ 

.09 

1867 

1868 

1869  

.25 
.11 
.03 

1870 

.04 

1871 

1872 

1,388.393 
2,522,100 
2;i0.0fl0 
6;J8. 676 
540.609 
951.  728 
1,322.725 
516, 825 
506.143 

""999.'406' 
108.200 
850.120 
486.550 
302.960 
386,597 
557,811 
56.250 
171,450 
641,352 
623,153 
1,573,6:34 
626, 786 
916. 682 
761,500 

.41 

1873 

.72 

1874 

.07 

1875 

1876 

.19 
.17 

1877 

1878 

1879 

1880 

1881 

1882 

.30 
.41 
.15 
.15 

T28" 

1883 

.03 

1884 

.26 

1885 *. 

.15 

1886 

.10 

1887 

.14 

1888 

.23 

1889 

.03 

1890 

.10 

1891 

.37 

1892 

.36 

1893                           .                     

.75 

1894 

.30 

1895 

.43 

1896 

.31 

Average  for  period 

.303 

From  this  tabulated  statement,  showing  that  an  average  tax  of 
one-fifth  of  1  per  cent  on  the  total  circulation  for  thirty-three 
years  would  have  covered  all  the  notes  of  the  failed  banks,  we 
may  certainly  assume  that  the  tax  imposed  will  much  more  than 
cover  the  notes  of  failed  banks  in  the  future,  and  that  a  5  per 
cent  safety  fund  will  prove  more  than  ample  to  take  care  of  any 
emergency  that  may  arise.  When  we  recall  the  fact  that  had 
there  been  no  bonds  to  secure  the  national-bank  notes  for  thirty 
years  the  note  holders  could  not  have  lost  to  exceed  $1,139,253,  of 

2763 


7» 

which  $958,247  was  still  in  unclosed  accounts,  we  may  confidently 
believe  that  this  provision  will  not  only  insure  the  notes,  but  will 
be  a  source  of  large  profit  to  the  Government. 

CLEABING-HOUSB  DISTBICT8. 

Sec.  10.  That  the  board  of  finance  shall  divide  the  United  States  into  clear- 
ing-house districts,  and  each  bank  organized  under  this  act  shall  belong  dis- 
tinctively to  some  one  district,  and  the  number  of  such  district  shall  be  plainly 
and  prominently  printed  upon  the  said  United  States  national-bank  notes 
issued  by  the  banks  located  therein.  The  several  banks  of  each  district,  upon 
receiving  United  States  national-bank  notes  belonging  to  any  other  district, 
shall  forward  the  same  to  a  bank  in  a  clearing-house  city,  which  shall  return 
them  to  the  district  to  which  they  belong. 

The  object  of  the  foregoing  section  is  to  insure  the  constant 
redemption  of  the  United  States  national-bank  notes,  to  materially 
strengthen  our  banking  system,  and  becomes  essential  for  the  fol- 
lowing reasons: 

OUB  STSTSM  WOTTLD  BHQUIRB  THEM. 

First.  Our  individual  banking  system  does  not  in  itself  give  tw 
the  same  facilities  for  forcing  current  redemption  that  large  banks 
with  branches  in  all  parts  of  the  country  would,  and  current  re- 
demption, it  must  be  remembered,  is  the  essential  counterpart  of 
a  credit  system  of  currency. 

THBT  WILL  DISTRIBUTE  OAPITJLIi  BBTTEIL 

Second.  This  system  of  districts  will  draw  the  normal  money- 
gold,  silver,  and  United  States  Government  bond  notes — to  the 
redemption  or  clearing-house  centers  and  keep  it  better  distributed 
throughout  the  year. 

CURBJBINCY  WILL  ALWAYS  EQUAL  DEMANDS. 

Third.  The  tendency  wiU  be  to  keep  the  credit  money  at  home, 
so  that  it  can  be  retired  whenever  the  bank  issuing  it  desires  to 
do  so,  and  thereby  save  the  tax  when  there  is  no  further  use  of 
the  money  in  circulation. 

PROFIT  ON  CIRCULATION  WILL  GO  TO  EACH  DISTRICT. 

Fourth.  This  system  will  enable  every  district  of  the  United 
States  to  furnish  whatever  credit  money  it  needs  by  sending  all 
credit  notes  from  other  districts  home  and  putting  out  its  own, 
and  thereby  save  all  the  profit  on  circulation  in  each  district  to 
the  district  itself. 

Fifth.  But  the  most  important  and  far-reaching  effect  of  this 


78 

provision  is  the  advantage  and  protection  it  gives  to  every  bank 
belonging  to  a  clearing-liouse  district. 

EVERT  BANK  SHOULD  BE  AS  STRONO  AS  AT.T.  COMBINES. 

It  is  important  to  observe  and  remember  that  every  bank  belong- 
ing to  a  clearing-house  district  is  individually  as  strong  as  the 
combined  capital  of  all  the  banks  included  in  the  district;  and  it 
is  not  at  all  likely  that  there  would  be  a  clearing-house  district 
with  a  capital  less  than  $25,000,000,  and  probably  none  less  than 
$50,000,000,  while  the  large  cities  would  be  many  times  stronger 
than  that  even. 

WITH   THE    STRENGTH    OP    CENTRALIZED    BANKING    WB   SHAIiL    HAVE   THB 
ADVANTAGE  OF  ^DIVIDUAL  BANKING. 

This  plan  would  give  us  all  the  power  of  the  most  perfect  cen- 
tralized system  of  banking  in  the  world,  with  all  the  advantages 
of  individual  banking  institutions.  In  fact,  I  am  of  the  opinion 
that  in  power  and  facility  it  would  surpass  any  system  now  in 
operation.  While  it  would  be  perfectly  independent  in  its  parts 
and  responsive  to  the  demands  of  every  locality,  it  would  be  free 
from  the  caprice  and  discrimination  of  a  management  hundreds 
and  perhaps  thousands  of  miles  away. 

IT  Wllil.  INSURE  GREATER  CAUTION. 

It  will  be  admitted,  I  think,  that  any  bank  belonging  to  A  clear- 
ing-house district  will  exercise  greater  caution  in  loaning  its  funds, 
or  in  issuing  its  notes,  than  it  would  were  it  not  a  member  of  some 
district,  for  it  must  realize  that  it  is  in  a  measure  under  the  sur- 
veillance of  the  associated  banks  and  can  not  afford  to  fall  under 
any  suspicion  on  account  of  poor  management;  hence  the  moral 
effect  must  necessarily  be  to  improve  the  character  of  all  our  bank- 
ing, a  matter  that  is  always  of  the  very  greatest  importance  to  the 
commercial  world. 

REDEMPTION  OF  NATIONAL-BANK  NOTES. 

Sec  11.  That  the  said  United  States  national-bank  notes  shall  be  a  legal 
tender  at  par  between  all  national  banks,  and  the  same  shall  be  redeemed 
upon  presentation  at  the  bank  of  issue  in  gold  coin,  or  at  the  option  of  the 
bank  of  issue  40  per  cent  thereof  may  be  redeemed  in  United  States  Gov- 
ernment bond  notes. 

The  first  provision  of  this  section  is  the  same  as  that  now  on  the 
statute  books  with  regard  to  our  present  bank  notes. 

The  object  of  making  these  United  States  national-bank  notes 
redeemable  in  the  United  States  Government  bond  notes  as  well 


74 

as  gold  is  to  protect  the  metal  reserve  of  the  bank  for  the  first  few 
years,  until  the  banks  can  accumulate  the  necessary  stock  of  gold 
and  adjust  themselves  to  the  new  conditions;  and  yet,  since  the 
United  States  Government  bond  notes  are  themselves  redeemable 
in  gold  at  the  bank  of  issue,  it  amounts  to  a  gold  redemption. 

FACILITIES   FOR   REDEMPTION  OF  NOTES. 

Sec.  12,  That  each  bark  organized  under  this  act  and  doing  business  out- 
side of  a  clearing-house  city  shall  select  some  national  bank  in  the  clearing- 
house city  of  its  own  district  through  which  it  shall  redeem  its  United  States 
national-bank  notes  in  gold  coin,  or.  at  the  option  of  said  redemption  bank, 
40  per  cent  thereof  may  be  redeemed  in  United  States  Government  bond 
notes,  and  for  said  purpose  shall  keep  on  deposit  with  said  bank  a  reserve  of 
5  per  cent  of  the  amount  at  any  time  outstanding,  and  said  5  per  cent  may  be 
con.-^ldered  a  part  of  its  required  reserve. 

The  object  of  this  section  is  to  insure  the  cun-ent  redemption  of 
bank  notes  by  facilitating  in  every  way  their  presentation  for  re- 
demption, and  thereby  constantly  testing  their  soundness  and 
bringing  them  back  to  the  bank  of  issue  for  retirement  if  they 
should  be  needed  no  longer  in  circulation. 

BANKS   WITD   $20,000  CAPITAL- 

Sec.  13.  First.  That  in  cities  with  less  than  2.000  population  banks  may  be 
organized  under  this  act  with  a  capital  of  $20.fX)0  or  any  greater  amount  in 
multiples  of  $.'>.0()0:  but  no  bank  shall  be  organized  in  any  reserve  city  with  a 
less  capital  than  $100.(«X). 

Sfecond.  That  under  such  regulations  and  restrictions  as  shall  be  established 
by  the  said  ministers  of  finance,  national  banks  organized  under  this  act  may 
establish  branch  banks  by  and  with  the  consent  of  said  ministers,  such  branch 
banks  to  hav*  the  right  to  receive  deposits,  make  loans,  grant  discounts,  and 
buy  and  sell  exchange,  but  in  no  case  to  be  permitted  to  issue  circulating 
notes  other  than  those  of  the  parent  bank.  It  shall  in  all  respects  be  consid- 
ered as  a  part  of  the  parent  bank,  and  in  each  case  where  such  branches  are 
maintained  the  ministers  of  finance  shall  receive,  in  the  reports  of  the  Cen- 
tral bank,  a  statement,  properly  sworn  to  and  attested,  of  the  condition  of  its 
branches. 

Said  ministers  of  finance  shall  also  have  the  right  of  separate  and  inde- 
pendent examinations,  and  they  may.  whenever  they  deem  it  neceasary.  re- 
quire, before  granting  the  right  to  any  bank  to  maintain  branches,  that  the 
paid-up  capital  stock  of  such  bank  be  increased  to  an  amount  to  be  fixed  by 
them. 

BRANCH    BANKS   MAY    BE   DESIRABLE. 

That  the  present  minimum  limit  of  $50,000  capital  for  national 
banks  prevents  the  establishment  of  them  in  many  places  where 
they  are  much  needed,  all  are  agreed;  and  whether  a  capital  as 
small  even  as  $20,000  would  serve  every  locality  and  meet  all  con- 
ditions there  is  very  great  doubt.  Indeed,  this  is  particularly  true, 
as  everyone  knows  who  has  studied  this  question  from  actual  ob- 


76 

servation,  in  localities  wliere  a  considerable  amount  of  money  Is 
required  for  a  few  months  every  year  and  very  little  or  no  demand 
at  all  during  the  other  months,  a  circumstance  that  can  only  be 
met  by  the  establishment  of  a  branch.  Otherwise  the  people  can 
never  have  local  and  convenient  banking  facilities  at  all.  How- 
ever, that  the  location  of  small  banks  and  the  opening  of  branches 
should  be  carefully  investigated  and  great  discretion  exercised  in 
granting  such  privileges  will  be  apparent  upon  a  moment's 
thought,  for  while  the  accommodation  of  the  people  should  be  a 
constant  study,  their  absolute  protection  should  never  be  for- 
gotten. 

GOVEUNMEXT  REDEMPTION  OF  NOTES  IN  CASE  01''  FAILURE. 

Sec.  U.  First.  That  in  the  event  of  the  liquidation  of  any  national  bank 
organized  under  this  act  the  United  States  Government  shall  redeem,  upon 
presentation  after  notice  given  as  herein  provided,  any  of  said  United  States 
Government  bond  notes  or  said  United  States  national  bank  notes,  reimburs 
iug  itself  for  the  full  amount  thereof  out  of  the  a.sset9  of  said  bank,  and  dis- 
tribute the  remaining-  assets  among  the  depositors  and  all  others  having  claims 
in  the  same  manner  as  now  provided  by  law. 

Second.  That  from  the  time  of  the  suspension  of  said  bank  up  to  the  date 
sot  by  said  ministers  of  finance  for  the  redemption  of  said  United  States 
national-bank  notes  they  shall  bear  interest  at  the  rate  of  5  per  cent  per  an- 
num. Such  notice  shall  be  given  in  some  newspaper  printed  in  the  clearing- 
house city  where  sjiid  notes  were  cleared;  but  nothing  herein  contained  shall 
be  construed  to  impose  any  liability  upon  the  Government  of  the  United 
States,  or  any  of  its  representatives,  beyond  the  amount  available  from  time 
to  time  out  of  said  *'  United  States  national-bank  note  redemption  fund." 

ADVANTAGE  OF  A  UNIFORM  SYSTEM  OF  CURRENCY. 

One  of  the  greatest  benefits,  if,  indeed,  not  the  greatest,  growing 
out  of  our  national  banking  system  has  been  the  fact  that  all  of 
the  notes  have  been  equally  good  every vzhere.  The  note  of  the 
bank  with  $50,000  capital  is  as  good  as  the  note  of  the  bank  with 
$5,000,000  capital;  that  instead  of  a  currency  issued  under  as 
many  different  banking  laws  as  there  were  States,  and  having  as 
many  different  values  as  were  represented  by  the  ever-changing 
credit  of  10,000  banks,  we  have  had  a  uniform  currency  good  not 
only  at  home  but  abroad.  We  have  learned  our  lesson,  and  our 
people  will  not  be  satisfied  with  a  currency  that  is  not  uniform 
and  equally  good  in  all  parts  of  the  country.  Therefore  we  want 
no  money  that  w^ill  not  stay  away  from  home  simply  because  it 
has  no  standing  elsewhere  and  every  transaction  forces  its  holder 
to  suffer  discount.     We.  do  not  want  a  dollar  that  is  too  poor  to 

2703 


76 

stay  away  from  home  and  mnst  necessarily  be  a  constant  sonrce 
of  loss  to  the  holder,  who  invariably  turns  out  to  be  a  laborer  if 
unfortunately  a  bill  should  prove  to  be  utterly  worthless.  It  is 
the  duty  of  this  Government  to  establish  a  system  of  currency 
that  will  protect  the  note  holder  against  the  possibility  of  a  loss  of 
the  millionth  part  of  a  cent.  No  man  living  anywhere  under  our 
flag  should  be  compelled  to  hesitate  a  moment  about  taking  any 
money  circulated  within  the  confines  of  the  Republic,  which  is 
to-day,  practically  speaking,  owing  to  our  railway  facilities,  tele- 
graphic and  telephonic  communication,  and  intimate  commercial 
relations,  one  extended  neighborhood,  one  gigantic  city  reaching 
from  the  Lakes  to  the  Gulf  and  extending  from  ocean  to  ocean. 

Therefore  we  want  no  State-bank  notes,  but  a  national  currency 
protected  and  ultimately  redeemed  by  the  Government.  Such  a 
currency  section  14  guarantees  to  the  American  people. 

INSURANCE  OF  DEPOSITORS. 

Sec.  15.  First.  That  any  bank  organized  under  this  act  may  at  any  time 
after  1905,  with  the  consent  of  the  ministers  of  finance,  insure  its  depositors 
against  loss  by  paying  into  the  United  States  Treasury  1  per  cent  upon  the 
average  balance  of  deposits  of  the  preceding  fiscal  year,  and  one-half  of  1  per 
cent  upon  the  average  annual  balances  thereafter  until  the  amount  so  paid 
into  the  United  States  Treasury  by  said  bank  shall  amount  to  5  per  cent  of 
the  average  balance  of  said  bank  for  the  last  preceding  year,  and  that  said 
ministers  of  finance  may  then  suspend  said  tax  for  the  time  being.  If  the 
deposits  of  said  bank  shall  increase,  or  for  any  reason  the  amount  of  the  in- 
surance fund  to  the  credit  of  said  bank  shall  be  less  than  6  per  cent  of  the 
deposits,  said  ministers  may  reimpose  said  tax  of  one-half  of  1  per  cent  upon 
the  deposits  of  said  bank;  and  if  said  bank  shall  fail  to  pay  such  tax  at  any 
time  after  the  payment  of  said  1  per  cent  the  amount  already  paid  by  said 
bank  shall  be  forfeited  to  the  United  States  Government,  and  the  insurance 
of  said  depositors  shall  thereupon  cease. 

Second.  That  the  amounts  of  money  so  received  shall  constitute  and  be 
known  as  the  "  depositors'  insurance  fund,"  and  each  bank  shall  be  entitled 
to  receive  interest  upon  the  amount  standing  to  its  credit  in  said  "  depositors' 
insurance  fund,"  at  the  rate  of  3  per  cent  per  annum,  and  the  same  shall  be 
adjusted  annually  on  the  30th  day  of  June. 

Third.  That  in  the  event  of  the  suspension  of  payment  by  any  bank  so  in- 
sured of  any  of  its  liabilities  as  they  accrue  the  United  States  Government 
shall,  within  sixty  days  thereafter,  no  reorganization  then  pending,  pay  the 
depositors  of  such  bank  in  full  all  their  just  claims,  if  no  question  has  been 
raised  thereto;  but  nothing  herein  contained  shall  be  construed  to  impose 
any  liability  on  the  Government  of  the  United  States,  or  any  of  its  represent- 
atives, beyond  the  amount  available  from  time  to  time  out  of  said  "  depos- 
itors' insurance  fund." 

Fourth.  That  the  United  States  Government  shall  thereupon  reimburse 
itself  out  of  the  assets  of  said  bank  for  any  and  all  such  moneys  paid  out  on 
2763 


77 

account  of  said  deposits,  less  the  amount  standing  to  the  credit  of  said  bank 
in  said  "depositors'  insurance  fund;"  and  the  remaining  assets  shall  be  dis- 
tributed among  the  creditors  in  the  same  manner  as  now  provided  by  law. 

KO  CLASS  OF  INSUBANCE  IS  MORE  IMPORTANT,   WISE,  AND  JUST,   AND    THE 
PEOrLE  SHOULD  DEMAND   IT. 

I  am  fully  aware  that  in  the  outset  this  section  will  provoke 
some  discussion  and  gives  apparently  a  better  field  upon  which 
those  differing  may  array  themselves  than  almost  any  other  pro- 
vision in  the  bill;  but  this  partial  admission  of  some  possible  ob- 
jection is  not  due  in  the  slightest  degree  to  a  want  of  soundness 
of  the  principle  involved  in  this  section  of  the  measure,  but  sim- 
ply because  such  a  provision  has  never  been  made  a  part  of  any 
banking  system.  That  it  will  ultimately  find  its  way  into  all,  I 
have  no  doubt,  for  there  is  no  business  of  such  extent  as  that  of 
banking  where  to-day  the  records  are  so  well  preserved  and  will 
enable  the  student  and  statistician  to  arrive  at  a  basis  of  insurance 
that  will  be  as  reliable  as  these;  not  even  mortuary  tables  upon 
which  nearly  every  human  life,  in  our  own  country  at  least,  is  car- 
rying some  insurance.  The  fire-insurance  system  of  the  world  is 
based  upon  data  that  enables  the  actuary  to  furnish  a  line  of 
premiums  that  gives  upon  large  averages  an  almost  mathematically 
certain  result. 

The  principles  that  control  in  the  vast  operations  of  both  life 
and  fire  insurance  are  identical  with  those  upon  which  this  pro- 
vision rests.  But  my  maturer  thought  impels  me  to  the. conclu- 
sion that  in  neither  is  there  so  much  need  of  averaging  risks  and 
escaping  the  consequences  of  misfortune  as  in  the  proposed  rem- 
edy for  the  crash  and  widespread  ruin  that  almost  invariably 
follows  bank  failures  to-day.  It  will  be  observed  in  this  connec- 
tion that  the  provision  is  purely  voluntary  in  its  operation,  and 
imposes  no  burden  or  risk  upon  the  Government  beyond  those  of 
a  trustee  for  the  fund  created. 

That  we  may  be  able  to  consider  the  question  in  a  most  practical 
way,  I  have  obtained  from  the  actuary  of  the  Treasury  the  follow- 
ing tabulated  statement,  which,  I  have  no  doubt,  will  disclose  a 
most  surprising  and  gratifying  result  to  every  student  of  those 
great  movements  that  look  in  the  direction  of  equalization  in 

material  things  and  social  conditions: 
2763 


78 


Year. 

Deposits- 
total 
of  all  banks. 

Deposits 

or  Tailed 

banks. 

Per  cent 
of  total 
deposits 
that 
would 
have  paid 
deposit- 
ors each 
ytsar. 

1863 

SS,  497.  (582 

78,070.545 

336.427.;J85 

5:58. 799. 4:5:3 

5:57.  785.  71t> 

55;).  874. 645 

550.540.172 

522.6i;G.547 

594.a56.347 

008,925.580 

015, 470, 770 

043.883,078 

002.5:51.811 

029.0J59.525 

631.709.700 

613.807.2i»5 

073.258.42:5 

870. 8:54.  fW7 

1.0:33.168.117 

l,0r>8,871,688 

l.a54,220.122 

1,009.749.551 

1,070.496,54:5 

1.151.010,262 

l,252.3*il,057 

1,307,12:5,561 

1,426.204,779 

1,506.425).  4:59 

18H4 

1805 

0.2G 

1800. 

.31 

1807 

.02 

1808 

.00 

1869              .     .  . 

.04 

1870 

1871 

2. 4(>3.  6;54 

521.:375 
G,  7o;5. 7:52 

3:J2.268 
2. 4 10.  .-,92 
1.427.429 
4.961.622 
2,015.140 

472.061 

778. 9iW 
2.654.090 
3,2511.890 

009. 705 
0,994.302 
3,0:57.5:30 

974.5:51 
0,27:5.257 
2, 460. 477 

937,907 

1.0.58.511 

16,;3:32,07l 

904. 689 
14.575.50.5 
;3.«>13..597 
5,672,511 

.42 

1872.   .. 

.09 

1873 

1.09 

1874 

.05 

1875 

.36 

1870 

.23 

1877 

.77 

1878 

.33 

1879 

.07 

1880 

.09 

1881 

.26 

1882 

.31 

1883 

.00 

1884 

.69 

1885  ....              .       , 

.29 

1886 

.m 

1887 

.50 

1888 

.11 

1889 

1890 

.07 
.07 

1891 

1,556.877.110 
1.745.849.469 
l,r/)9.731.110 
1.071.89:3.716 
1,703,406,071 

1.05 

1892      .                                             

.06 

1893 

.91 

1894 

1895 

.22 
.33 

The  average  per  cent  for  each  year,  from  1864  to  1895,  inclusive, 
upon  the  total  deposits  that  would  have  been  sufficient  to  pay 
the  depositors  in  fall,  had  absolutely  nothing  been  realized  from 
from  the  assets  of  the  banks,  was  only  0.31,  or  less  than  one-third 
of  1  per  cent  per  annum. 

ALL  CLOSED    BANKS  SHOW   AM   AVKRAOE  OF  75   PER   CENT   RE TUUNS. 

The  lowest  percentage  of  dividend  paid  to  the  creditors  of  any  failed 
national  banks  whose  affairs  are  closed  was  that  of  fourteen  and  a  fraction, 
to  the  creditors  of  the  Cook  Coianty  National  Bank,  of  Chicago,  fll.,  being 
No.  38  on  the  list  of  banks  placed  in  the  hands  of  receivers.  The  next  lowest 
percentage  of  dividend  was  seventeen  and  a  fraction,  to  the  creditors  of  the 
Tennessee  National  Bank,  of  Memphis,  constituting  No.  5  on  the  list.  The 
average  percentage  of  dividends  paid  to  creditors  of  insolvent  national 
banks  who.se  affairs  are  entirely  closed  is  about  75  per  cent.— .Reporr  o/ f/te 
CoviptroUer  of  the  Cmnency,  1896,  page  31. 

THE    INSURANCE    TAX    COULD    NOT    EXCEED    ONE-TWELFTH    OV  1    PER    CENT 
PER    ANNUM. 

Taking  the  experience  of  all  insolvent  national  banks  whose 
accounts  have  been  closed,  it  is  to  be  observed  that  the  actual 
2SSi 


79 

insurance  charge  upon  the  deposits  of  national  banks  would  have 
been  one- twelfth  of  1  per  cent  per  annum  or  a  total  of  but  3i 
per  cent  in  thirty-three  years.  Would  this  not  have  been  a  most 
insignificant  and  inconse(iuential  cost  to  the  banks  compared 
to  the  great  and  almost  incalculable  benefits  it  would  have  been 
to  trade  and  commerce  to  have  saveil  from  failure  that  great  army 
of  merchants  who  have  been  brought  to  ruin  by  the  failure  of 
the  banks  with  which  they  were  keeping  their  accounts?  Let  us 
weigh  a  matter  of  such  moment  carefully  and  come  to  our  final 
conclusion  with  the  utmost  deliberation,  especially  since  the  chief 
if  indeed  not  the  only  objection  is  that  it  is  a  new  proposition. 

With  all  of  our  bank  notes  ultimately  redeemed  by  the  Gov- 
ernment, as  provided  in  the  preceding  sections,  and  the  depositors 
of  the  national  banks  insured  against  loss  in  case  of  failure,  it  is 
confidently  believed  that  bank  failures  would  be  reduced  to  a 
minimum;  that  money  panics  would  be  unknown;  and  that  we 
would  escape  the  most  unfortunate  and  serious  consequences 
growing  out  of  bank  failures,  the  ruin  of  the  merchants  and  trades- 
people. , 

HOW  THE  TWO    FUNDS  SHALL  BE  INVESTED. 

Sec.  16.  That  all  moneys  received  by  the  United  States  Government  on 
account  of  the  tax  upon  United  States  Government  bond  notes  and  United 
States  national-bank  notes,  or  on  account  of  the  taxes  paid  to  insure  deposit- 
ors against  loss,  may  be  invested  in  the  followinj?  cla.sse.sof  securities,  and  no 
others:  First,  United  States  Government  bonds  or  United  States  certificates 
of  indebtedness;  second,  the  bonds  of  any  State  which  has  not  defaulted  in 
the  payment  of  either  principal  or  interest  of  any  of  its  indebtedness  for 
twenty  years  just  preceding  such  investment:  third,  the  bonds  of  any  city 
in  the  United  States  having  a  population  of  more  than  10;).0CX).  and  which  has 
not  defaulted  in  the  payment  of  either  principle  or  interest  of  any  of  its  in- 
debtedness for  twenty  years  just  preceding  such  investment. 

REASONS   FOR  THE   INVESTMENTS. 

But  for  the  fact  that  some  provision  that  the  funds  accumulated 
in  the  "  United  States  Government  bond  note  redemption  fund" 
and  in  the  "depositors' insurance  fund  "should  bo  invested  in 
some  kind  of  securities,  two  objections  might  arise:  First,  it  might 
be  objected  that  a  large  amount  of  money  was  being  withdrawn 
from  the  channels  of  trade:  second,  that  the  Government  should 
allow  interest  on  so  considerable  a  sum,  which  it  would  not  be 
prudent  to  do  unlcvss  there  were  some  income  from  that  source  to 
offset  such  allowance. 


80 

PO"W^EB  rOB  PUTTING  THE  ACT  INTO  SUCCESSFUL  OPERATION. 

Sec.  17.  That  for  the  purpose  of  carrying  this  act  into  effect  and  enabling 
the  banks  organized  hereunder  to  maintain  their  required  reserves,  and  for 
the  purpose  of  equalizing  and  adjusting  the  relative  use  of  gold  and  silver 
in  the  United  States,  the  ministers  of  finance  are  hereby  authorized  and 
empowered  to  sell  and  dispose  of  any  of  said  new  2  per  cent  bonds  at  par  for 
gold  coin,  or  to  exchange  the  same  for  any  of  the  legal-tender  money  of  the 
United  States  at  par:  the  bonds  so  sold  or  exchanged  to  be  issued  in  denom  i 
nations  of  $25,  or  multiples  thereof,  at  the  option  ot  the  buyer,  and  to  become 
due  and  payable  in  1950;  and  the  said  ministers,  for  the  same  purpose  (with 
the  concurrence  of  the  Secretary  of  the  Treasury),  are  also  authorized  and 
empowered  to  exchange  from  time  to  time  gold  bullion  or  gold  coin  for  silver 
bullion  or  silver  coin,  and  silver  bullion  or  silver  coin  for  gold  bullion  or  gold 
coin. 

Every  man  of  affairs  will  at  once  realize  that  it  will  be  of  the 
utmost  importance  that  the  ministers  of  finance  be  able,  in  a  move- 
ment so  comprehensive  as  this,  involving  as  it  does  the  complete 
readjustment  of  our  finances  and  recomposition  of  our  currency, 
subject  to  the  approval  of  the  Secretary  of  the  Treasury,  who  is 
responsible  for  the  proper  conduct  of  the  income  and  expenditure 
accounts  of  the  Government,  to  do  anything  that  the  purposes  of 
this  act  render  necessary. 

LIMIT  OF  LOA*NS  TO  OFFICERS  AND  DIRKCTOB8. 

Sec  18.  That  the  loans  and  discounts  of  any  bank  organized  under  this  act 
granted  to  its  executive  officers  or  employees  shall  in  no  case  directly  or 
indirectly  exceed  10  per  cent  of  the  capital,  and  the  same  shall  be  secured  by 
proper  collateral,  or  by  an  additional  signature  or  signatures  of  financially 
responsible  persons  to  the  notes  taken,  and  that  the  same  bo  made  only  upon 
the  written  approval  of  a  majority  of  the  board  of  directors  and  a  separate 
record  thereof  kept. 

Sec  19.  That  no  loan  shall  be  made  to  a  director  not  an  executive  officer 
of  the  bank  except  either  upon  a  deposit  of  good  and  sufficient  collateral 
security,  or  upon  a  note  given  therefor,  bearing,  in  addition  to  such  director's 
own  name,  the  signature  or  signatures  of  one  or  more  flnanciaUy  responsi- 
ble persons,  or  unless  a  resolution  has  been  passed  by  the  board  of  directors 
and  signed  upon  the  record  by  at  least  a  two-thirds  majority  thereof,  giving  to 
such  director  a  line  of  credit  covering  any  advances  to  be  made  to  him. 

PENALTY  ATTACHING   TO  ANY  OFFICEU  OK  EMPLOYEE. 

Sec  20.  That  any  president,  vice-president,  cashier,  assistant  cashier,  or 
employee  of  any  bank  organized  under  this  act  who  shall  be  convicted  of  un- 
lawfully borrowing  or  using  any  of  the  funds  of  the  bank  with  which  they 
are  connected  shall  be  imprisoned  for  ten  years,  and  any  officer  of  any  such 
national  bank  at  the  time  of  its  failure  shall  be  ineligible  to  any  official  posi- 
tion ii»  any  national  bank  thereafter. 

BANKS  MUST  NOT  PROMOTE. 

Sec  2L  That  it  shall  be  unlawful  for  any  national  bank  to  engage  in  the 
promotion  of  any  enterprise,  or  to  loan  the  funds  of  the  bank  upon  the  bonds 
or  securities  of  incomplete  and  partially  developed  projects  of  any  kind,  such 
as  partially  constructed  railroads,  streetcar  lines,  electric-light,  gas,  water, 
mining,  manufacturing,  or  irrigation  plants. 
2763 


81 


DIRECTORS  MUST  EXAMINE  THEIR  BAI7KB. 

Sec.  22.  Tliat  upon  a  day  in  each  year,  to  be  designated  by  said  ministers 
of  finance,  the  dii-ectors  of  the  national  banks  shall  be,  and  are  hereby,  re- 
quired to  make  an  examination  of  the  affairs  of  the  bank  with  which  they  are 
connected  and  submit  their  report  thereon  upon  blanks  furnished  by  said 
ministers,  and  said  report  shall  be  signed  by  at  least  three-fourths  of  said 
directors. 

The  following  extract  from  the  report  of  the  Comptroller  fnlly 

justifies  the  greater  care  these  sections  impose  upon  the  directors 

and  the  stricter  rules  they  establish  for  the  officers  in  the  conduct 

of  a  national  bank: 

CAUSES  OF  FAII^URE  OF   NATIONAL  BANKS  AND  DUTY  OF  DIRECTOBg. 

A  careful  examination  has  been  made  into  the  causes  of  failures  of  national 
banks  and  the  number  failing  from  each  cause,  from  1863  to  1896,  with  the  fol- 
lowing result: 

Three  have  resulted  from  defalcation  of  oflScers;  22  from  defalcation  of 
officers  and  fraudulent  management;  1  from  defalcation  of  officers  and  ex- 
cessive loans  to  others;  2  from  defalcation  of  officers  and  depreciation  of 
securities;  19  from  excessive  loans  to  others,  injudicious  banking,  and  depre- 
ciation of  securities;  18  from  excessive  loans  to  officers  and  directors  and  de- 
preciation of  securities;  6  from  excessive  loans  to  officers  and  directors  and 
investment  in  real  estate  and  mortgages;  3  from  excessive  loans  to  otheps 
and  depreciation  of  securities;  4  from  excessive  loans  to  others  and  invest- 
ments in  real  estate  and  mortgages;  1  from  excessive  loans  and  failure  of 
large  debtors;  8  from  fraudulent  management;  15  from  fraudulent  manage- 
ment, excessive  loans  to  officers  and  directors,  and  depreciation  of  securities; 
12  from  fraudulent  management  and  injudicious  banking;  8  from  fraudulent 
management,  defalcation  of  officers,  and  depreciation  of  securities;  5  from 
fraudulent  management,  injudicious  banking,  investments  in  real  estate  and 
mortgages,  and  depreciation  of  securities;  9  from  fraudulent  management 
excessive  loans  to  officers  and  directors,  and  excessive  loans  to  others;  19' 
from  injudicious  banking:  54  from  injudicious  banking  and  depreciation  ot 
securities;  13  from  injudicious  banking  and  failure  of  large  debtors;  13  from 
investments  in  real  estate  and  mortgages  and  depreciation  of  securities;  43 
from  general  stringency  of  the  money  market,  shrinkage  in  values,  and  im- 
prudent methods  of  banking,  and  8  were  wrecked  by  the  cashiers. 

The  inevitable  conclusion  to  be  drawn  from  a  study  of  the  causes  resulting 
in  these  failures  is  that  in  the  great  majority  of  instances  those  directly  re- 
sponsible for  the  management  of  the  banks  involved,  both  directors  and 
executive  officers,  have  been  negligent  of  their  duties  and  wanting  in  insist- 
ing upon  the  employment  of  methods  of  ordinary  safety  and  prudence.  It 
follows  that  every  bank  failure  has  caused  more  or  less  loss  to  creditors  and 
shareholders,  and  subjected  those  connected  with  these  institutions  to  criti 
cism.  The  relation  which  the  Comptroller's  office  bears  to  the  banks  and  its 
method  of  examinations  have  been  so  much  a  matter  of  public  discussion 
that  it  seems  wise  at  this  time  to  call  the  attention  of  both  Congress  and  the 
public  to  these  relations,  and  the  duties  which  it  is  believed  rest  directly 
upon  and  should  be  discharged  by  those  whose  oaths  make  it  obligatory  on 
them  to  conserve  the  interests  of  the  bank. 

The  duties  resting  upon  directors  are  not  in  contemplation  of  law  merely 
formal  ones  to  be  met  in  a  formal  manner  only.  It  is  expected  that  they 
shall  be  thoroughly  conversant,  both  in  general  and  in  detail,  with  the  man- 
ner of  the  conduct  of  institutions  with  which  connected  and  the  method* 
276a-6 


8S 

employed.  Bank  directors  should  know  whether  the  best  bookkeeping 
methods  are  used  in  their  banks,  whether  precautionary  measures  in  the 
verifying  of  entries  upon  ledgers  and  pass  books  are  taken,  and  whether 
employees,  from  president  to  bookkeeper,  are  engaged  in  speculative  enter- 
prises and  employing  the  bank's  funds,  thus  endangering  the  safety  of  those 
trusting  the  bank.  The  character  of  the  internal  management  necessarily 
makes  the  institution  a  safe  or  an  unsafe  one.— Report  of  the  Comptroller, 
1806^  pages  31-32. 

POWER  OF  ASSISTANT  CASHIER. 

Sec.  23.  That  the  assistant  cashier,  in  the  absence  of  the  cashier,  or  on  ac- 
count of  his  inability,  shall  be,  and  he  is  hereby,  authorized  to  sign  the  circu- 
lating notes  of  the  bank,  and  sign  and  make  oath  oradrmation  to  the  reports 
called  for  by  said  ministers  of  finance  showing  the  condition  of  the  bank  with 
which  he  is  connected,  and  such  oath  or  affirmation  and  all  others  required 
of  bank  officers  may  be  administered  by  any  notary  public  or  commissioner 
of  deeds. 

At  present  the  law  limits  the  authority  which  this  section  gives 
to  the  assistant  cashier,  to  the  cashier,  which  very  greatly  inter- 
feres with  the  proper  conduct  of  the  business  of  many  banks  in 
cases  of  absence  or  sickness  of  the  cashier,  and  therefore  this  pro- 
vision simply  facilitates  the  performance  of  the  duties  of  the 
cashier. 

GOVERNMENT  CHARTERS  FOR  CliBARlNO  HOUSES. 

Sec.  24.  That  the  clearing  houses  of  the  respective  districts  shall  act  under 
charters  granted  by  the  United  States  Government,  running  for  fifty  years 
and  authorizing  them  to  effect  clearances  between  banks  and  to  do  other 
business  for  and  between  banks,  in  accordance  with  such  rules  and  regrula- 
tions  as  may  be  prescribed  by  said  ministers  of  finance  from  time  to  time. 

The  above  section  states  so  clearly  its  object  that  when  the 
importance  of  convenient  places  for  the  clearance  of  exchanges 
and  the  current  redemption  of  the  note  issues  is  considered  in 
conjunction  with  the  general  purpose  of  this  bill,  no  one  will 
doubt  the  wisdom  and  necessity  even  of  granting  national  char- 
ters to  the  clearing  houses  as  well  as  to  the  banks,  as  they  are  an 
important  and  essential  adjunct  in  completing  a  sound  currency 
system. 

POWER  OF  the  secretary  OF  THE  TREASURY  TO  MEET  ANY  DEFICIENCY. 

Sec  25.  That  to  provide  for  any  temporary  deficiency  now  existing  in  the 
Treasury  of  the  United  States,  or  which  may  hereafter  occur,  the  Secretary 
of  the  Treasury  is  hereby  authorized,  at  his  discretion,  to  issue  certificates  of 
indebtedness  of  the  United  States,  payable  in  from  one  to  five  years  after 
their  date,  to  the  bearer,  in  gold  coin,  of  the  denomination  of  $25,  or  multiples 
thereof,  with  annual  coupons  for  interest  at  a  rate  of  interest  not  to  exceed 
3  per  cent  per  annum,  and  to  sell  and  dispose  of  the  same  for  not  less  than  an 
equal  amount  of  gold  coin  at  the  Treasury  Department  and  at  the  subtreas- 
uries  and  de.signated  depositories  of  the  United  States,  and  at  such  post-offices 
as  he  may  select.  And  such  certificates  shall  have  the  like  qualities,  privi- 
leges, and  exemptions  provided  in  the  resumption  act  (approved  January  14, 
1875,  entitled  "An  act  to  provide  for  the  resumption  of  specie  payments  ")  for 
2763 


83 

tlie  bonds  therein  authorized.    And  the  proceeds  thereof  shall  be  used  for 
the  purpose  prescribed  in  this  section,  and  for  no  other. 

Sec.  2a.  That  all  acts  or  parts  of  acts  inconsistent  with  the  foregoing  shall 
be,  and  the  same  are  hereby,  repealed. 

That  the  United  States  Government  should  have  power  to  meet 
any  emergency  that  may  arise  on  account  of  its  lack  of  revenue, 
no  man  of  business  sense  will  deny.  Nor  can  it  be  assumed  that 
this  Government,  any  mure  than  a  private  business,  will  alwaj^s 
have  a  surplus  revenue  even  with  a  change  in  our  tariff  laws.  A 
large  surplus  is  not  now  necessary;  therefore,  should  we  succeed 
in  adjusting  our  incQme  to  our  expenses  the  coming  year,  changed 
conditions  might  shortly  bring  about  a  deficit,  which  could  only 
be  provided  for  in  two  ways  during  that  current  year: 

First.  Close  the  courts  and  other  departments  of  the  G  overn- 
ment. 

Second.  Temporarily  provide  the  means  for  carrying  them  on 
by  the  sale  of  certificates  of  indebtedness  under  the  authority 
given  by  this  provision,  to  which  every  reasonable  man  of  patriotic 
and  practical  instincts  and  business  experience  who  is  not  con- 
trolled by  partisan  prejudice  nor  hope  of  temporary  political  ad- 
vantage will  give  his  hearty  approval  and  unqualified  support. 

Having  now  discussed  in  detail  the  various  provisions  of  the 
proposed  measure,  I  desire  to  call  attention  to  certain  matters 
that  invariably  present  themselves  in  any  intelligent  discussion 
of  this  all-important  subject. 

THE  PI.AN  ADOPTED   MUST  BE  CLEAR  EVEN  TO  THE  LAYMAN. 

First.  It  would  be  useless  to  waste  time  even  in  discussing  any 
measure,  to  say  nothing  of  passing  it,  unless  upon  examination  it 
could  be  readily  understood  and  from  the  advantages  it  offered 
would  at  once  attract  practically  all  of  the  bank  capital  in  the 
country,  so  that  we  would  have  a  uniform  system;  therefore  it 
becomes  pertinent  to  inquire  whether  banks  would  immediately 
organize  under  this  act  should  it  become  a  law. 

IT  MUST  BE  SUCH  AS  TO  AT  ONCE  ATTRACT  THE  BAJfKING  CAPITAL  OF  THE 

COUNTRY. 

In  the  first  place,  they  would  do  so  because  of  the  protection  and 
moral  support  the  clearing  houses  provided  for  would  give  at  all 
times,  and  more  particularly  when  any  stress  was  thrown  upon 
the  banking  interests  of  the  country, 

87ti3  ' 


84 

In  the  second  place,  they  would  regard  it  quite  a  sufficient  ad- 
vantage of  itself,  in  a  great  m<ajority  of  cases,  if  no  other  was 
gained,  to  be  able  to  issue  their  own  note  circulation,  and  thereby 
accommodate  all  their  customers,  who  are  entitled  to  credit,  at  a 
cost  to  themselves  of  only  1  or  2  per  cent  and  without  the  least 
trouble,  when  at  present  they  can  only  partially  do  so,  even  at  a 
cost  of  6  or  7  per  cent,  and  with  great  trouble  and  annoyance  to 
themselves  and  a  corresponding  expense  to  the  customers  of  the 
bank,  if,  perchance,  they  can  accommodate  them  at  all. 

In  the  third  place,  that  while  the  people  of  the  United  States  will 
save  annually  in  interest  on  the  national  debt  about  $12,000,000 
and  an  incalculable  amount  of  interest  on  their  loans,  particu- 
larly in  a  section  where  the  rates  are  now  very  high,  the  banks 
would  realize  a  net  gain  upon  the  circulation  taken  out  upon  the 
2  per  cent  bonds  of  If  per  cent  and  a  greater  profit  upon  their  own 
circulation  than  upon  the  money  hired  from  their  correspondents 
hundreds  of  miles  away. 

In  the  fourth  place,  this  act  would  individualize  the  bank  and 
give  it  much  greater  freedom,  simplify  its  methods,  and  greatly 
economize  its  management,  which  would  result  in  a  corresponding 
and  mutual  gain  to  both  the  bank  and  borrower. 

Indeed,  the  sooner  the  American  people  learn  to  transfer  all 
taxes  from  the  money  engaged  in  banking  to  other  forms  of  wealth 
which  they  can  not  use,  the  cheaper  will  they  make  the  tools  with 
whicn  commerce  is  carried  on  and  the  shops  kept  in  motion.  The 
earning  capacity  of  labor  will  be  just  that  much  greater,  for  in  the 
last  analysis  money  is  the  real  tool  that  fells  the  trees  out  of  which 
we  build  our  houses  and  make  our  furniture,  mines  the  coal,  digs 
the  ore,  spins  the  wool,  weaves  the  cotton,  makes  our  garments, 
and  prepares  our  food,  and  should  be  made  as  cheap  as  possible, 
so  that  labor  can  continue  to  get  a  greater  and  greater  share  of 
its  profits  until  a  perfect  adjustment  of  labor  and  capital  is  reached. 

NOTE  HOLDERS  SHOULD  HAVE  A  PRIOR  LIEN  ON  ASSETS. 

Second.  A  question  may  be  raised  with  regard  to  the  relative 
rights  of  the  note  holder  and  the  depositor.  But  that  the  note 
holder  should  have  a  prior  lien  upon  the  assets  of  the  bank  in  ac- 
cordance with  our  present  law  is  essential,  as  the  notes  leave  the 
immediate  neighborhood  of  the  bank  issuing  them.    The  fact  of 


85 

their  being  a  prior  lien  npon  the  assets  of  the  bank  justifies  their 
passing  current,  because  the  people  know  they  are  safe  by  experi- 
ence. Again,  the  note  holder  seldom  knows  the  officers  of  a  bank 
as  the  depositor  does  who  keeps  his  account  with  some  particular 
bank  because  of  his  acquaintance  with  the  management.  Then 
the  depositors  of  banks  are  almost  invariably  the  borrowers  of  the 
bank  and  the  very  persons  who  first  get  tne  notes.  It  is  therefore 
of  the  highest  importance  that  the  notes  be  as  good  as  possible  in 
order  that  one  may  borrow  money  at  the  lowest  rate  of  interest 
possible,  and  the  notes  remain  out  until  he  is  ready  to  pay  oflE  his 
loan,  for  the  better  the  notes  the  longer  will  they  remain  out  and 
circulate;  indeed,  if  they  remain  unquestioned,  the  tendency 
would  be  to  continue  to  circulate  until  called  in  by  the  bank  issu- 
ing them. 

PBAOTICALtiY  HB  OBTAINS  IT  UJTWAT. 

It  may  be  suggested  by  some  that  the  notes  should  not  be  a  prior 
lien  upon  the  assets  of  the  bank,  because  that  gives  to  the  note 
holder  an  advantage  over  the  depositor;  but  the  reasons  already 
given  justify  the  principle.  However,  there  is  still  another  rea- 
son that  forecloses  all  discussion  upon  the  question  as  a  matter  of 
actual  practice,  and  that  is  this:  It  will  be  admitted  that  a  bank 
will  not  issue  any  of  its  bank  notes  unless  its  customers  need  the 
money.  Now,  it  is  certain  that  if  a  bank  can  not  issue  its  notes 
it  will  bundle  up  a  good  margin  of  securities  and  send  them  to 
its  correspondent  in  some  distant  city  and  get  the  necessary 
amount  of  currency,  giving  the  correspondent  bank  a  first  lien 
upon  all  the  securities  turned  over;  so  it  will  make  no  difference 
in  the  last  analysis  whether  it  issues  its  notes  or  borrows  the 
money.  The  currency  used  will  be  a  first  lien  upon  a  sufiicient 
amount  of  the  bank's  assets  to  insure  its  redemption.  The  posi- 
tion of  the  depositor  is  the  same  in  both  cases.  The  criticism 
arises  from  a  mere  sentiment,  and  will  always  be  without  any 
foundation  in  practice.  But,  as  a  matter  of  advantage  to  the  bor- 
rowers of  a  bank,  who  are  almost  invariably  the  depositors,  in 
commercial  banks  at  least,  and  as  a  matter  of  justice,  considering 
the  difference  in  the  relation  of  the  note  holder  and  depositor  to 
the  bank,  the  note  should  be  a  prior  lien  upon  the  assets.  Again, 
all  national-bank  notes  are  a  prior  lien  upon  the  assets  of  the  bank  j 

therefore  this  provision  is  strictly  in  accord  with  our  existing  law. 
2763 


86 

BANKS  CAN  MAINTAIN  GOLD   PAYMENTS   BETTEU  THAN  THE   GOVERNMENT. 

Third.  It  is  sometimes  urged  that  the  Government  of  the  United 
States  can  better  maintain  gold  payments  than  the  banks;  but 
when  it  is  said  that  it  ought  to  because  of  its  greater  credit,  the 
argument  is  exhausted,  since  all  the  facts  and  experience  are  the 
other  way.  Indeed,  the  Government,  if  it  maintains  redemption 
in  gold  payments,  can  only  do  so  through  the  assistance  of  the 
banks,  as  has  been  most  strikingly  illustrated  through  tlie  use  of 
the  banks  in  the  gold  purchases  during  the  past  three  years. 
Therefore  it  goes  without  saying  that  the  banks,  which  are  the 
sole  agency  through  which  the  Government  procures  its  gold,  can 
certainly  do  for  themselves  what  they  can  do  for  the  Government. 
And  the  reason  is  this:  The  banks  have  the  ways  and  means  or 
machinery  for  obtaining  the  gold  if  they  want  it  or  must  have  it, 
while  the  Government  can  only  obtain  gold  through  the  banks  by 
the  sale  of  bonds,  which  must  be  paid  for  by  taxing  the  people. 

THE  GOVERNMENT  HAS    NO  NATURAL    FACILITIES    FOR  MAINTAINING   COLD 

PAYMENTS. 

inflowing  i 

lu  gold  with  which  to  meet  its  demand  obligations;  hence  its  great 
difficulties  and  constant  danger.  By  the  great  increase  of  its  de- 
mand obligations,  which  jumped  up  from  $346,000,000  in  187U  to 
$1,000,000,000  in  1893,  with  no  corresponding  increase  in  its  reserve, 
it  strained  its  credit  to  an  extent  that  gave  rise  to  doubt  as  to  its 
ability  to  maintain  gold  payments.  The  persistent  effort  on  the 
part  of  some  to  construe  the  doubtful  word  "  coin"  into  silver  or 
a  fifty-cent  redemption,  as  well  as  gold,  has  thrown  a  cloud  upon 
our  intention,  challenged  our  honor,  disturbed  public  confidence, 
checked  enterprises,  and  rendered  any  substantial  and  permanent 
prosperity  and  progress  doubtful  until  our  measure  of  value  is 
definitely  and  irrevocably  settled.  This  is  one  of  the  chief  and 
under  the  present  conditions  a  fatal  objection  to  Government 
redemption,  and  to-day  threatens  every  pending  contract  and  will 
prevent  a  vast  amount  of  new  ones,  especially  those  running  for 
a  long  period  of  time. 

BANKS  IN  OTHER  COUNTRIES   HAVE  NO   DIFFICULTY  IN   MAINTAINING  GOLD 
PAYMENTS. 

The  banks  of  Scotland,  Ireland,  England,  Germany,  France, 
and  Canada  have  found  no  such  serious  difficulty  in  maintaining 


87 

gold  payments  cas  the  United  States,  nor  did  the  Suffolk  system. 
And  this  has  been  done  in  most  instances  with  a  very  much 
smaller  reserve  than  that  provided  for  in  this  measure.  Why  is 
this?  Just  because  every  note,  draft,  or  bill  of  exchange  signed 
by  two  or  more  makers  or  indorsers  is  payable  in  gold  or  its  equiva- 
lent on  demand  or  in  thirty,  sixty,  or  ninety  days,  giving  everyone 
absolute  confidence,  and  no  one  ever  asks  for  gold  unless  it  is 
needed  for  some  special  purpose. 

How  would  it  be  with  our  own  banks?  Let  us  suppose  that 
banks  having  capital  equal  to  our  national  banks  should  organize 
under  this  law  and  the  act  were  in  force.  What  would  the  con- 
dition be?  What  the  result?  There  would  be  $600,000,000  of  gold 
in  the  United  States,  about  $600,000,000  of  silver,  and  $435,104,402 
of  United  States  Government  bond  notes,  with  such  an  increase  in 
note  circulation  from  time  to  time  as  the  seasons  or  emergency 
might  require,  amounting  to  a  maximum  of  $650,014,895,  making 
a  total  circulation  of  $3,321,209,297. 

OUR  PRESENT  GOLD  SUPPLY  SUFFICIENT  TO  MAINTAIN  aOLD  PAYMENTS. 

At  a  glance  it  will  be  observed  that  $600,000,000  of  gold  would 
amount  to  nearly  40  per  cent  of  all  the  rest  of  the  money  in  the 
country  and  therefore  would  constitute  a  redemption  fund  far  in 
excess  of  any  requirement  experience  has  demonstrated  necessary. 
Now  add,  if  you  please,  the  total  deposits  of  the  national  banks, 
amounting  to  $1,597,891,058,  making  a  total  of  $3,283,100,355,  and 
you  still  have  a  gold  reserve  of  about  20  per  cent.  Add  to  this,  if 
you  will,  the  total  deposits  of  all  other  banks— private.  State,  and 
savings— and  loan  and  trust  companies,  amounting  to  $3,276,- 
710,910,  making  a  grand  total  of  money  (including  both  silver 
and  currency)  and  deposits  of  $6,559,811,265,  and  we  would  still 
have  a  reserve  of  10  per  cent,  or  an  amount  greater  than  that 
maintained  in  Great  Britain,  where  it  runs  from  6  to  10  per  cent. 
But  should  the  banks  think  that  more  gold  is  necessary,  could 
they  not  obtain  it  far  more  easily  now  than  we  did  from  1878  to 
1888,  when  we  accumulated  $500,000,000,  nearly  as  much  as  we 
have  to-day?  It  has  been  ascertained  by  experience  that  we  have 
quite  enough  for  our  commercial  needs;  and  we  accumulated  this 
vast  sum,  too,  when  Germany  and  France  and  other  nations  were 
adding  rapidly  to  their  stores  of  gold.    If  one-half  of  the  product 

2763 


of  1896,  or  $107,000,000,  or  all  of  it,  $314,000,000,  should  be  wanted 
more  for  monetary  purposes  than  in  the  arts,  it  would  be  converted 
into  money.  Gold,  like  silver,  wheat,  corn,  cattle,  hogs,  cotton, 
wool,  iron,  and  labor.  Is  nothing  but  a  commodity  which  can  be 
obtained  by  anyone  who  wants  it  in  the  markets  of  the  world,  and 
there  is  no  class  of  merchants  so  well  equipped  for  procuring  it  as 
the  banks  of  the  country,  whose  special  business  it  is  to  provide 
safe  methods  for  carrying  on  the  commerce  of  the  world. 

TOTAL  RESOURCES  OF  THE  BANKS. 

In  conclusion,  it  should  be  observed  that  the  banks  of  the  United 
States  have  total  resources  with  which  to  meet  their  deposits  and 
procure  gold  with  which  to  maintain  the  redemption  of  their  notes 
amounting  to  $7,463,810,269  in  gold  value,  which  would  certainly 
prove  a  source  of  sufficient  confidence  to  the  people,  and,  united 
with  our  present  facilities  for  transacting  business  through  the 
means  of  checks  and  drafts,  would  reduce  the  requirement  of  gold 
for  redemption  purposes  below  any  point  yet  reached  in  the  his- 
tory of  banking;  but  the  possibility  of  repudiation  through  a  de- 
preciated dollar  must  be  eliminated  at  once  and  the  suggestion 
spurned  by  every  man  who  desires  permanent  prosperity. 

This  doubt  eliminated  and  our  standard  of  measure  once  per- 
manently established,  we  can  confidently  expect  millions  upon 
millions  of  capital  to  pour  into  every  avenue  of  profitable  pro- 
duction. Supplement  these  forces  with  a  credit  currency  respon- 
sive to  the  demands  of  trade  at  rates  of  interest  for  commercial 
money  as  low  as  the  lowest  in  the  world,  and  we  shall  receive  the 
highest  possible  exchangeable  value  for  all  forms  of  the  products 
of  labor,  and  the  banks  of  the  United  States  acting  under  one  sys- 
tem will  maintain  gold  redemption  with  greater  ease  than  any 
other  country  on  the  globe. 

Apart  from  detail  and  matters  of  administration,  three  objects 
which  I  regard  as  fundamental  and  essential  to  a  complete  and 
sound  financial  and  currency  system  have  been  sought  in  draft- 
ing this  measure: 

FIXED  STANDARD  IMPORTANT  TO   PERMANENT  PROSPERITY. 

First,  I  realize  that  to  secure  the  most  permanent  prosperity 
and  the  highest  returns  for  the  labor  of  our  20,000,000  toilers,  we 
must  have  a  standard  of  value  that  is  unequivocal,  unchanging, 
and  universal  throughout  the  commercial  world. 


89 


DEMAND  OBLIGATIONS  MUST  BE  RETIRED. 

Second.  That  if  we  would  obviate  a  very  great  and  constant  ex- 
pense to  our  people  and  infinite  danger  to  our  Government  in 
meeting  its  demand  obligations  they  must  be  retired  and  canceled. 

A  CREDIT  CURRENCY  MUST  BE  OBTAINED, 

Third.  That  if  we  desire  to  lower  and  equalize  the  rate  of  inter- 
est throughout  the  Un.ited  States,  to  secure  justice  in  all  sections, 
to  provide  money  to  move  our  crops  and  manufactures  at  the  least 
possible  expense,  to  insure  our  farmers,  tradespeople,  and  com- 
merce against  money  panics,  we  must  have  a  responsive  and  elas- 
tic currency. 

To  point  out  exactly  why  the  free  coinage  of  silver  would  not 
assist  in  the  slightest  degree  in  accomplishing  any  one  of  these 
essential  things  may  not  be  out  of  place  here,  as  it  is  evident  that 
many  of  our  people  have  been  led  to  believe  that  whatever  our  ills 
the  free  coinage  of  silver  would  cure  them  all,  when,  in  fact,  it 
would  only  aggravate  them  and  add  others  still  more  serious. 

For  your  convenience  I  submit  the  following  table,  taken  from 
the  report  of  the  Director  of  the  Mint  for  1896,  page  50: 

Estimated  stock  of  gold  and  silver  in  the  United  States  and  the  amount  per 
capita  at  the  close  of  each  fiscal  year  from  187S  to  1896,  incltisive. 


Popula- 
tion. 

Total  coin  and  buUlon. 

Per  capita. 

Fiscal  year  end- 
ing June  30— 

Gold. 

Silver. 

Gold. 

Sil- 
ver. 

Total 
metal- 
lic. 

1873       

41,677,000 
42,796,000 
43,951,000 
45,137,000 
46,353,000 
47,598,000 
48,866,000 
50,155,783 
51,316,000 
52,495,000 
5:3.693,000 
54.911,000 
56; 148, 000 
57,404,000 
58,680,000 
59,974,000 
61,289,000 
62,623,2.50 
63,975,000 
65,520,000 
66,946,000 
68,397,000 
69,878,000 
71,390,000 

$135,000,000 
147,379,493 
121,134,906 
130,056,907 
167,501,473 
213,199,977 
245,741.837 
351,841,206 
478,484,538 
506,757,715 
543,732,063 
545,500,797 
588,697,036 
590,774,461 
654,520,335 
705,818,855 
680,063,505 
695,563,039 
646,582,852 
664,275,335 
587,697,685 
627,293,201 
636,229,825 
599,597,964 

$6,149,305 

10,355,478 

19,367,995 

36,415,993 

56,464.437 

88,047,907 

117,536,341 

148,533,678 

175,384,144 

303,317,134 

233,007,985 

255,568,142 

283,478,788 

313,252,844 

352,903,566 

386,611,108 

420,548,929 

463,211,919 

522,377,740 

570,313,544 

615,861,484 

634,347,757 

635,854,949 

638,738,071 

$3.23 
^.44 
2.75 

3.88 

3.61 

4.47 

5.03 

7.01 

9.33 

9.65 

10.10 

9.93 

10.48 

10.39 

11.15 

11.76 

11.09 

11.10 

10.10 

10.15 

8.93 

9.18 

9.10 

8.40 

$0.15 

.34 

.44 

.81 

1.21 

1.85 

3.40 

3.96 

3.41 

3.87 

4.34 

4.65 

5.a5 

5.44 
6.  CO 
6.44 
6.86 
7.39 
8.16 
8.70 
9.20 
9.13 
8.97 
8.81 

$3.38 
3.68 

1874 

1875 

3  19 

1876.... 

3.69 

1877 

1878 

4.83 
6  33 

1879 

1880 

1881 

7.43 

9.97 

12.73 

1883 

13.53 

1883 

14.44 

1884 

1885 

14.58 
15.53 

1886 

15.73 

1887 

17.15 

1888 

18.20 

1889 

17.95 

1890 

18.49 

1891 

18.36 

1893.  ..  . 

18.85 

1893 

18.13 

1894 

1895 

18.31 
18.07 

1896 

17.21 

27^ 


90 


TAMPERING   WITH  THE  STANDARD. 

It  will  be  observed  that  since  1888,  the  year  both  parties  began 
to  tamper  with  our  standard  of  value  and  talk  of  bimetallism,  we 
have  been  losing  our  gold.  During  the  nine  preceding  years  we 
gained  $400,077,048,  and  in  the  same  ratio  should  now  have  $1,165,- 
885,933  instead  of  $599,599,964,  the  amount  we  hold  to-day,  the 
balance  having  been  crowded  out  by  the  poorer,  cheaper,  less 
valuable  metal  on  account  of  the  doubt  raised  as  to  whether  we 
were  really  a  gold-standard  country  or  not. 

With  this  table  before  us,  the  following  observations  seem  jus- 
tified: 

THE  WORD   DEMONETIZED. 

First.  That  if  the  definition  of  the  word  "demonetize"  is  to  be 
taken  from  Webster,  "to  deprive  of  value,  or  to  withdraw  from 
use  as  currency,"  the  United  States  has  not  demonetized  silver, 
which  has  to-day  full  legal-tender  quality  and  has  not  been  with- 
drawn from  use,  but  increased  from  $6,149,305  in  1873  to  $628,- 
728,071  in  1896. 

FREE  COINAQB   nAS    NOT    INCREASED    OUR    GOLD  AS    RAPIDLY  AS  LIMITED 
COINAGE  DAS  SILVER. 

Second.  That  the  free  coinage  of  gold  has  increased  our  stock 
of  gold  only  $464,597,964,  or  from  $135,000,000  to  $599,597,964, 
while  our  acts  for  the  limited  purchase  of  silver  have  increased 
our  stock  of  it  $622,579,766,  or  §150,000,000  more  than  free  coinage 
of  gold  increased  our  stock  of  that  metal. 

FREE  COINAGE  DOES  NOT  BRING  ANY   METAL  TO  THE  MINT  NTSCESSARILY. 

Third.  That  the  free  coinage  of  any  metal  does  not,  therefore, 
necessarily  bring  any  of  that  metal  to  the  mint,  for  if  it  did,  all 
the  gold  in  the  United  States  in  the  form  of  bars  would  have  gone 
there  at  once  and  been  coined,  but,  as  a  matter  of  fact,  for  some 
purposes  it  is  preferred  in  the  form  of  bars. 

Fourth.  That  of  two  metals  at  given  quantities,  one  quantity 
being  worth  just  one-half  of  the  value  of  the  other,  as  silver  and 
gold  would  be  at  10  to  1,  there  would  not  remain  a  single  reason 
why  the  more  valuable  metal  should  go  to  the  mint  at  all;  hence, 
silver  alone  would  go. 

Fifth.  But  we  are  told  that  the  fact  that  they  both  could  go 
there  would  make  them  and  keep  them  at  the  same  value. 


91 


FREE  COINAGE  NEVER  HAS   RAISED  THE  PRICE  OP  ANY  METAL. 

It 

From  1792  to  1834  the  free  coinage  of  silver  and  gold  at  the 
ratio  of  15  to  1  did  not  increase  the  value  of  silver  one-half  of  1  per 
cent,  and  all  of  the  gold  left  the  country  and  our  standard  was  sil- 
ver: and  from  1834  to  1853  the  free  coinage  of  gold  and  silver  at  the 
ratio  of  IG  to  1  did  not  raise  gold  one-half  of  1  per  cent,  and  all  of 
our  silver  left  the  country  and  our  standard  became  gold  and  has 
been  gold  ever  since.  Can  it  be  that  any  sane  man  believes  that 
free  coinage,  then,  would  raise  the  value  of  silver  ICO  per  cent,  or 
actually  double  its  value?  Japan  did  not  think  so  when  she  estab- 
lished the  ratio  of  32^  to  1. 

If  they  were  both  to  be  free  coined,  the  only  rational  course 
would  be  to  make  the  coinage  ratio  and  commercial  ratio  coincide — 
that  is,  about  32  to  1 — as  Japan  did. 

However,  if  the  ratio  should  afterwards  diverge  to  the  extent 
of  one-half  of  1  cent  an  ounce,  owing  to  our  present  facilities  for 
transportation  and  exchange,  the  metal  worth  the  most  would 
at  once  cease  to  circulate  as  money,  and  one-third  at  least  of  all 
the  money  we  now  have  would  disappear.  For  no  man  would 
pay  $1.01  for  anything  he  could  obtain  for  $1,  and  every  debtor 
would  hide  his  dishonesty  behind  the  law  that  made  it  possible 
for  him  to  defraud  his  creditors.  The  result  would  be  that  those 
pieces  of  metal  which  were  the  most  valuable  would  not  circu- 
late at  all;  so  that  at  no  time  would  we  have  the  use  of  both 
metals  circulating  together,  as  we  have  them  to-day. 

WITH  THE   FREE  COINAGE  OF  TWO   METALS   THEY  WILL  NOT  CIRCULATE 
CONCURRENTLY. 

That  the  two  metals  would  remain  at  any  given  ratio  in  value, 
which  is  essential  to  secure  concurrent  circulation  under  free 
coinage,  no  one  believes,  not  even  the  free-coinage  bimetaliist,  who 
now  admits  that  it  would  be  only  an  alternating  use  of  the  two 
metals;  for  this  has  never  been  true  of  any  two  commodities  at 
any  time,  anywhere,  in  the  history  of  the  world,  and  to  make  it 
possible  now,  we  must  assume  that  the  commercial  and  coinage 
ratios  coincide  exactly,  say  at  32  to  1;  that  the  production  of  the 
two  metals  will  then  continue  at  exactly  32  to  1;  that  the  cost  of 
the  production  will  remain  exactly  equal  in  the  ratio  of  32  to  1: 

27ti3 


that  the  demand  in  the  arts  and  finance  will  be  exactly  33  to  1 — 
conditions  whicli  are  unnatural,  improbable,  impossible,  prepos- 
terous! 

That  if  the  ratio  of  coinage  were  at  16  to  1  regardless  of  the 
commercial  value,  which  is  33  to  1,  not  a  single  dollar  of  gold 
would  circulate. 

THE  FREE  COINAGE  OF  SILVER  AT  OUB  PRESENT  RATIO  WOULD  DESTROY 
TWO-THIRDS  OF  OUB  MONEY. 

The  effect,  therefore,  of  free  coinage  at  the  ratio  of  16  to  1, 
or  any  other  ratio  up  to  an  exact  commercial  ratio,  would  be  to 
drive  all  of  our  gold— now  about  $600,000,000,  or  one-third  of  all 
of  our  money— out  of  circulation,  reduce  our  $600,000,000  of  silver 
to  one-half  its  present  money  value — for  it  is  now  maintained  at  a 
parity  with  gold— or  to  $300,000,000,  and  bring  our  $580,000,000  of 
paper  to  a  silver  basis,  or  equal  to  only  $290,000,000.  So  that  in- 
stead of  securing  more  money  from  free  coinage  we  would  have 
but  $590,000,000,  all  told,  instead  of  the  amount  we  now  have — 
$1,780,000,000. 

When  once  upon  a  silver  basis  there  would  be  no  inducement 
whatever  to  take  silver  bullion  to  the  mint  for  coinage,  any 
more  than  there  is  gold  to-day,  a  truth  that  is  verified  by  the  fact 
that  the  free  coinage  of  silver  has  never  given  to  any  country  a 
large  per  capita  circulation.  When  the  silver  dollar  is  worth  no 
more  than  the  bullion  it  contains,  there  would  be  no  inducement 
for  the  bullion  owner  to  pay  the  expense  of  transportation  and 
take  the  trouble  of  getting  his  silver  bullion  to  the  mint,  for  he 
could  sell  it  in  the  open  market  for  the  same  price  the  Govern- 
ment would  allow  him  for  it.  Therefore  we  have  a  right  to  con- 
clude that  free  coinage  would  do  just  the  reverse  of  what  its  advo- 
cates claim  for  it — reduce,  and  not  increase,  the  amount  of  money 
we  now  have. 

WE  SHOULD  HAVE  THE  STANDARD  OF  THE  CIVILIZED  WORLD. 

The  silver  standard  would  vary  every  hour  of  the  day  as  silver 

rose  and  fell  in  the  markets  of-  the  world,  for  all  business  in  the 

last  analysis  would  have  to  be  adjusted  upon  a  gold  basis,  and 

the  producers  of  the  country  would  be  ground  out  of  all  of  their 

profits  by  the  middlemen  under  the  reasonable  pretense  that  silver 

might  fall  before  they  could  in  their  turn  dispose  of  the  products, 
2763 


93 

Nothing  is  more  essential  to  an  even  and  permanent  prosperity 
than  an  unvarying  and  unequivocal  standard;  but  the  free- 
silver  advocates  hope  for  nothing  but  an  alternating  standard, 
which  would  be  the  greatest  possible  curse  to  our  commerce  and 
the  utter  and  eternal  ruin  of  all  our  farmers  and  mechanics,  re- 
ducing them  in  this  country,  as  it  has  in  all  others,  to  a  life  of 
poverty  and  peonage. 

FREE  COINAGE  WILL  NOT  RETIRE  OTJB  DEMAND  OBLIGATIONS, 

The  most  expensive  and  most  dangerous  form  of  money  for  a 
nation  to  maintain  is  its  own  demand  notes;  but  there  is  no  pre- 
tense that  the  free  coinage  of  silver  will  relieve  us  from  this  diffi- 
culty and  enable  us  to  retire  them. 

FREE  COINAGE  MEANS  HIGH  BATES  OF  INTEBEST. 

The  most  important  aid  to  every  producer  is  a  low  rate  of 
interest  and  a  system  of  currency  that  always  responds  to  the 
requirements  of  his  business,  but  no  one  claims  that  free  coinage 
would  give  us  lower  rates  of  interest,  but,  on  the  contrary,  much 
higher;  nor  is  it  claimed  that  it  would  give  us  a  currency  that 
would  respond  to  and  reflect  the  local  conditions  of  trade  in  all 
parts  of  the  country  at  every  season  of  the  year. 

A  full  understanding  ot  our  difficulties  and  a  clear  comprehen- 
sion of  our  needs,  therefore,  does  not  lead  us  to  conclude  that  the 
free  coinage  ot  silver  would  relieve  us  in  the  slightest  degree  from 
any  one  of  our  difficulties,  but  add  another  disturbing  element  to 
our  already  complicated  problem,  bring  us  universal  disaster  and 
a  commercial  revolution  that  would  subject  our  producers  to  tiie 
schemes  and  machinations  ot  the  middlemen  and  speculators. 

For  the  purpose  ot  bringing  to  your  notice  certain  great  truths 
now  established  by  all  experience,  and  which  we  must  recognize 
if  we  would  be  wise  in  dealing  with  this  most  important  subject 
and  prove  ourselves  true  patriots  rather  than  show  ourselves  blind 
and  slavish  partisans,  I  reprint  from  the  report  of  the  Director  of 
the  Mint  for.  1896  the  following  tabulated  statement  found  on 
pages  46  and  47: 

8763 


Q± 


Monetary  systems  and  approximate  stocks  of  money  in  the  aggre* 


Country. 


Monetary 
system. 


Ratio 

between 

gold  and 

full  legal 

tender 

silver. 


Ratio 

between 

gold  and 

limited 

tender 

silver. 


Popula- 
tion. 


Stock  of 
Rold. 


United  States  a 


United  Kingdom 
Prance  


Germany. 
Belgium.. 


Italy 

Switzerland. 

Greece 

Spain 

Portugal 

Roumania... 


Servia 

Austria-Hungary . 
Netherlands 


Norway . . 
Sweden  .. 
Denmark. 
Russia  j . . 
Turkey... 


Australasia 

Egypt.-. 

Mexico 

Central  American 

States. 
South  American 

States. 
Japan/ 


India 

China 

Straits  Settlements 

Canada 

Cuba 


Haiti  .... 
Bulgaria 

Siam 

Hawaii.. 


Gold  and 

silver. 

Gold 

Gold  and 

silver. 

Gold 

Gold  and 

silver. 

do.... 

do.... 

do.... 

do.... 

Gold 

Gold  and 

silver. 

do.... 

Gold 

Gold  and 

silver. 

Gold 

do.... 

.....do.... 
Silver.... 
Gold  and 

silver. 

Gold 

do.... 

Silver.... 
do.... 


1  to  15. 98 


ltoir>i 


-doe. 


Gold  and 
silver. 

do.... 

Silver 


do 


Gold 

Gold  and 

silver. 

do.... 

do.... 

Silver 

Gold  and 

silver. 


Total 


ItolSi 

I  to  15f 
1  to  15  J 
Itolo} 
Itoloi 


1  to  14. 95 

1  to  14.28 
1  to  14. 38 

1  to  13. 957 

1  to  14. 38 

ltol4.38 
1  to  14. 38 
1  to  14. 38 
1  to  14. 38 
1  to  14. 08 


1  to  151 


1  to  15J 
1  to  15i 


1  to  13. 69 
ltol5 

1  to  14. 88 
1  to  14. 88 
1  to  14. 88 
1  to  12. 90 
lfcol5j 

1  to  14. 28 
1  to  15. 08 


1  to  16.} 
1  to  15} 

1  to  15} 

1  to  16. 18 

ItolS 


1  to  14. 28 


ltol5i 

1  to  15} 
1  to  15} 


1  to  15. 98 


1  to  14.38 
i"to'i4."95 


71,900,000 

39,300,000 
38,400,000 

52,300,000 
6,300,000 

30,900,000 
3,000,000 
2,2fJ0,000 

18,(X)0,000 
5,100,000 
5,400,000 

2,300,000 
44,500,000 
4,800,000 

2,000,000 

4,800,000 

2,300,000 

126,0()0,(KJ0 

22,000,000 

4,900,000 

7,()0(J,000 

12,600.000 

5,600,000 

33,000,000 

44,000,000 

295,000,000 

3d0.0;)0,000 

£70,801,000 

5,  SOU,  000 

1,800,000 

1,000,000 

3,300,000 

5,000,000 

100,000 


$672,200,000 

c  584. 000, 000 
c  772, 000, 000 

6675,000,000 
650,000,000 

c  100, 400, 000 
c  16, 000,  OIK) 
6500,000 
c 38, 600, 000 
c  5, 100, 000 
c3S,600,000 

cl,500,000 
c 167, 200, 000 
c26,800,000 

c  7, 500. 000 

c  8, 500, 000 

c 16, 500, 000 

c 488, 600, 000 

650,000,000 

6130,000,000 

d  129, 300, 000 

6  5,(K)0,000 

6500,000 

6  40,000,000 

c  79, 500, 000 


c  16, 000. 000 
615,000,000 

c4, 000, 000 
6  800,000 
c600,000 

c4, 000, 000 


4.143,700,000 


a  November  1,  1898:  all  other  countries  January  1, 1898. 
6 Estimate.  Bureau  of  the  Mint. 

c Information  fui*nished  through  United  States  representatives. 
dHaupt. 

e  Except  Venezuela  and  Chile. 
/Actually  the  silver  standard,  but  has  since  January  1, 1887,  adoted  gold 

standard, 

2763 


95 


gate  and  per  capita  in  the  principal  countries  of  the  world. 


Stock  of  silver. 


Full  tender. 


Limited 
tender. 


TotaL 


Uncovered 
paper. 


Per  capita. 


Gold. 


Sil- 
ver. 


Pa- 
per. 


Total 


$555,600,000 


c 431,300, 000 

692,000,000 
650,000,000 

cl2,500,000 

'""b566',m 


c25,000.000 
c53,900,000 


c3, 500, 000 
630,000,000 


c  97, 000, 000 
cl2,000,000 

635,000,000 

c  69, 300, 000 

;i  950, 000, 000 

6750,000.000 

d 240, 000, 000 

c5, 000, 000 

61,500,000 

c3, 000, 000 

63,400,000 

c  193, 300, 000 

cl,  000, 000 


$75,800,000 

c 121, 700, 000 
c  57, 900, 000 

6115,000,000 
67,000,000 

c26,500,000 
c 2, 100,000 
61,000,000 

c  49, 300, 000 
c7,400,000 

c  10, 600, 000 

c  1,700, 000 
c  40, 000,  (100 
c3, 300, 000 

c2, 000, 000 

c4, 900, 000 

c5, 400.000 

640,000,000 

d  10, 000, 000 

67,000,000 
d5, 200. 000 


c  18, 500, 000 


d2, 000, 000 
cl,  000, 000 


61,500,000 
63,400,000 


$631,400,000 

121,700.000 
492,200,000 

207,000,000 
57,000,000 

39,000,000 
2,100,000 
1,500,000 

49.300,000 
7,400,000 

10,600,000 

1.700.000 
65,000,000 
56,200,000 

2,000,000 

4.900,000 

5,400.000 

43,500,0(X) 

40,000,000 

7.000,000 
5,200,000 
97,000,000 
12,000,000 

35,000,000 

87,700,000 

950,000,000 

7.50,000,000 

242,000,000 

6,000,000 

1,500,000 

4,500,000 

6, 8a),  000 

193,300,000 

1,000,000 


$424,400,000 

clll,800,000 
c  98, 000, 000 

c  126, 100, 000 
c  72. 500, 000 

c 168. 500, 000 
c  14, 300, 000 
c  14, 200, 000 

c  103. 000, 000 
c  59, 700, 000 
c  11, 800, 000 

c3, 000, 000 
c  204, 500, 000 
c32,500,000 

c3, 800,000 

"*c4i606,'600 
c 467, 200, 000 


c  4, 000, 000 
c8, 000, 000 

6  550,000,000 


137,000,000 


ca5,ooo,ooo 


c  4, 100, 000 


$9.35 

14.86 
20.10 

12.91 
7.93 

3.25 
5.33 
.23 
2.14 
1.00 
7.15 

.65 
3.76 
5.58 

3.75 
1.77 
7.17 
3.88 
2.27 

28.53 

18.47 

.39 

.09 

1.11 

1.81 


2.76 
8.33 

4.00 

.24 

.12 

40.00 


3.10 
12.82 

3.96 
9.05 

1.26 

.70 

.68 

2.74 

1.45 

1.96 

.74 

1.46 

11.71 

1.00 

1.02 

2.35 

.35 

1.82 

1.43 

.74 

7.70 

2.14 

.97 


3.21 

2.08 

63.68 

1.03 

.83 

4.50 
2. 

38. 
10.00 


$5.90 

2.84 
2.55 

2.41 
11.51 

5.45 
4.77 
6.45 
5.72 
11.71 
2.19 

1.30 

4 

6.77 

1.90 


2.00 
3.70 


.32 
1.43 


15.28 


.12 

'6."63 
4.10 


$24.03 


35.47 
19.28 


9.96 
10.80 

7.36 
10.60 
14.16 
11.30 

2.69 

9.81 

24.06 

6.65 
2.79 
11.52 
7.93 
4.09 

27.96 
19.21 
8.41 
3.66 

17.38 
3.80 


3.33 

2.08 
63.68 
9.82 
9.16 

12.60 
2.30 

38.78 
50.00 


3,616,700,000      620,200,0004,236,900,0002,558,000,000 


g  Includes  Aden  and  Perim,  Ceylon,  Hongkong,  Labuan,  and  Straits  Settle- 
ments. 

/iF.  C.  Harrison. 

t  Indian  currency  committee  report. 

J  By  imperial  decree  has  adopted  the  gold  standard  since  January  1, 1897. 
2763 


96 

From  a  careful  study  of  this  table  everyone  must  be  driven  to 
admit  the  following  facts,  which  will  dispose  of  a  vast  amount  of 
misinformation  and  a  myriad  of  misstatements  now  floating  about 
the  country: 

LOCAL  CONDITIONS  ANB  ECONOMIC  LAWS  WILL  DETERMINE  THE  PER  CAPITA 
CIRCULATION. 

First.  That  if  any  country  fixes  by  law  what  kind  of  money  it 
shall  have,  local  conditions  under  the  operation  of  economic  laws 
will  determine  what  the  amount  per  capita  will  be. 

By  referring  to  the  following  gold-standard  countries  it  will  be 
observed  that  there  is  a  great  divergence  m  the  per  capita  circu- 
lation. Hawaii,  which  mines  neither  gold  nor  silver  nor  has  any 
mint  of  its  own,  has  $40  per  capita  in  American  gold  coins,  the 
highest  of  all  the  nations.  Then  follow  in  their  order  Austral- 
asia, France,  Egypt,  England, Germany,  United  States,  Denmark, 
Norway,  Canada,  and  so  on  down  to  Sweden,  with  only  $1.77. 

But  a  much  greater  divergence  will  be  found  in  the  silver- 
standard  countries  by  referring  to  the  Straits  Settlements,  which 
have  $63.38  per  capita,  the  highest,  and  in  their  order  Siam, 
Mexico,  Central  American  States,  China,  South  American  States, 
down  to  Russia,  which  has  the  lowest,  or  only  35  cents  per  capita. 
It  will  be  noticed  that  witn  the  exception  of  the  first  two,  the 
gold-standard  countries  use  more  silver  than  the  silver-standard 
countries  themselves  use,  which  is  additional  proof  that  local 
conditions  and  economic  laws,  and  not  the  free  coinage  of  metals, 
determine  the  amotmt  of  the  metal  used. 

GOLD  WILL  BE  OBTAINED. 

Second.  If  any  country  unequivocally  selects  gold  as  its  stand- 
ard it  will  obtain  all  of  that  metal  it  requires,  as  evidenced  by  the 
fact  that  nearly  all  the  gold  reserves  have  been  acquired  during 
the  past  twenty  years,  the  leading  nations  having  increased  their 
holdings  from  $1,200,000,000  in  1873  to  $4,143,000,000  in  1896. 

THE  SELECTION  OF  GOLD  AS  A  STANDARD    IS  THE  RESULT  OF  EVOLUTION. 

The  gradual  adoption  of  the  gold  standard  during  the  past  quar- 
ter of  a  century  by  all  the  civilized  nations  of  the  world  has  been 
as  distinctly  the  result  of  evolution  as  the  adoption  of  steam  in 
the  place  of  the  patient  sail  or  the  faithful  horse,  and  more  recently 

the  subtle  power  of  electricity  in  tne  place  of  steam;  the  use  of 
8763 


97 

the  telegraph  for  the  more  sluggish  mail;  the  telephone  for  the 
telegraph  and  the  messenger  boys.  In  commerce  the  end  sought 
is  to  bring  the  producer  and  consumer  together  at  the  least  pos- 
sible expense  or  loss.  Freight  rates  have  been  driven  to  the  lowest 
possible  point;  the  middlemen  must  be  eliminated  everywhere; 
the  insurance  against  accidents  must  be  made  a  nominal  sum; 
doubts  must  be  banished;  speculation  must  be  reduced  to  a  mini- 
mum; exchange,  always  a  tax  upon  the  producer  and  consumer, 
must  be  in  a  common  and  universal  measure  of  value  and  cost  no 
more  than  a  fair  rate  of  interest  for  the  use  of  the  money  involved; 
for  that  nation  which  is  handicapped  by  the  speculation  incident 
to  a  different  and  varying  measure  of  value  will  be  distanced  at 
the  very  start  and  doomed — a  fact  which  is  thoroughly  under- 
stood and  appreciated  by  every  nation  that  has  tried  it  and  suf- 
fered from  the  ruinous  disadvantages  under  which  they  labored. 
The  latest  to  learn  this  lesson  are  Russia  and  Japan. 

GOOD  MONEY  AND  PRICKS  BEAR  NO  RELATION  TO  BACH  OTHllR. 

Third.  That  the  amount  of  good  money  per  capita  in  circula- 
tion under  normal  conditions  bears  absolutely  no  relation  to  the 
price  of  articles  except  so  far  as  the  price  may  be  affected  thromgh 
the  rate  of  interest  money  commands  and  the  sacrifices  producers 
must  make  in  selling  their  products  under  adverse  conditions 
there  is  no  longer  any  doubt. 

COMPARISON  OF  PER  CAPITA  CIRCULATION. 

By  referring  to  the  table  it  will  be  observed  that  France  has 
nearly  double  the  money  per  capita  that  England  has,  yet  everyone 
knows  who  has  inquired  into  the  subject  that  almost  every  article 
you  want  to  buy  is  cheaper  in  France  than  in  England— just  the 
very  reverse  of  what  the  free-coinage  advocate  telis  us  would  be 
true.  Then  there  is  Canada  with  only  $9.32  per  capita,  about  one- 
quarter  of  that  of  France,  and  yet  things  are  much  higher  in  Can- 
ada than  in  France.  It  will  be  found  upon  investigation  that 
prices  average  about  the  same  in  all  of  the  following  countries, 
notwithstanding  the  great  difference  in  the  per  capita  circulation. 
Greece  has  only  $7.36,  about  one-fifth  of  that  of  France;  Norway 
$6.05,  about  one-sixth  of  that  of  France;  and  Sweden  $2.79,  or 
considerably  less  than  one-twelfth  of  that  of  France.  From  tnese 
lacts  we  must  conclude  that  the  condition,  habits  of  the  people, 
2763-7 


98 

and  practices  in  the  use  of  money,  pass  books,  checks,  drafts,  and 
other  devices  determine  the  quantity  they  use,  and  that  the  quan- 
tity bears  no  relation  whatever  to  prices. 

NEITHER.    THE     FIIEE     COINAGE   OF    METALS,    NOU    MINES,     NOR    MINTS.   NOIl 
STAMPS  UPON  COINS  BEAR  AXT  RELATION  TO  PER   CAPITA  CIRCULATION. 

It  is  a  most  curious  fact  that  the  two  countries  which  have  the 
highest  per  capita  circulation,  having,  respectively,  the  gold  and 
silver  standards,  liave  neither  gold  nor  silver  mines,  nor  mints,  nor 
coins  even  bearing  their  own  stamp. 

Hawaii  is  upon  the  gold  standard  with  a  limited  legal  tender  of 
$10  extended  to  silver,  but  with  neither  mines,  mints,  nor  coins, 
has  accumulated  $40  per  capita  in  gold  bearing  the  American 
eagle,  and  $10  per  capita  in  silver,  a  few  of  which  she  had  coined 
at  the  San  Francisco  mint. 

The  Straits  Settlements,  which  is  upon  the  silver  standard,  with- 
out mines,  mints,  or  her  own  coins,  has  accumulated  $03.68  per 
capita  of  Mexican  dollars  and  subsidiary  coins  which  were  pre- 
pared by  the  London  mint  for  the  Hongkong  market. 

Peru  has  mined  great  quantities  of  silver  for  several  hundred 
years,  and  its  mints  have  been  in  existence  for  more  than  three 
hundred  years,  and  it  is  estimated  coined  on  an  average  6,000,000 
pesos  per  annum,  or  a  total  of  over  1,800,000,000  (about  $1,800,- 
000,000  coin  value).  Yet  Peru  with  this  vast  output,  has  been 
upon  a  paper  basis  at  times,  with  no  silver  whatever  in  circula- 
tion. Although  her  paper  money,  after  the  Chilean  war,  became 
worthless  and  she  adopted  the  silver  standard,  having  soon  found 
that  the  drain  upon  her  resources  because  of  the  losses  in  exchange 
would  drive  her  from  the  markets  of  the  world,  she  has  recently 
adopted  the  gold  standard  and  prohibited  the  importation  of  silver 
coins. 

Mexico,  too,  has  been  a  marvelous  producer  of  silver,  and  has 
eleven  mints,  which  together,  from  1537  to  1894,  turned  out  $'5,350,- 
819,537,  or  a  per  capita  cii'culation  for  her  present  population  of 
$205;  and  although  her  annual  coinage  of  silver  exceeds  $2  per 
cajjita,  she  has  only  $7.70  per  capita  in  circulation. 

'  Australasia,  the  second  largest  producer  of  gold  in  the  world, 
turned  out  in  1895  $44,798,300,  and  coined  in  1894  $35,203,048, 
or  a  production  of  $9  per  capita  and  a  coinage  of  $7  per  capita  in 


99 

a  single  year;  and  yet  she  has  only  $26.53  per  capita  of  gold  in 
circnlution. 

Russia,  a  large  producer  of  gold,  mining  about  thirty  millions  an 
nually,  has  accumulated  only  §3.88  per  capita,  while  neither  Great 
Britain  nor  France  has  any  gold  mines  to  speak  of  (France  hav- 
ing produced  only  $107,000  in  1895  and  Great  Britain  none),  yet 
have  together  $1,350,000,000  of  gold  coin,  France  having  $20.10  per 
capita  and  Great  Britain  $14.80. 

The  United  States  illustrates  this  truth  equally  well,  if,  indeed, 
not  more  strikingly.  Our  production  of  gold  from  18G1  to  1879 
amounted  to  $794,050,000,  and  our  silver  product  amounted  to 
$381,050,000,  or  a  total  of  $1,175,700,000;  and  yet  not  a  dollar  of 
either  circulated  during  this  period,  because  of  the  local  conditions 
then  existing  in  the  United  States.  Although  the  United  States 
has  produced  upward  of  two  billions  of  gold,  or  $300  per  capita 
for  our  present  population,  we  have  in  circulation  only  $9.35  per 
capita;  and  yet  we  have  had  our  own  mints  and  free  coinage  of 
gold  from  the  beginning  of  the  Government. 

In  the  face  of  these  facts,  then,  can  anyone  deny  that  the  char- 
acter and  amount  of  money  per  capita  in  every  country  are  deter- 
mined solely  by  the  local  conditions  under  the  operation  of  economic 
law,  and  that  neither  the  gold  nor  silver  mines  nor  mints  control, 
or  even  bear  the  slightest  relation  to  the  amount  of  gold  or  silver 
in  circulation. 

Now  let  our  friends  who  maintain  that  free  coinage  will  give  us 
more  money  explain  these  various  facts  and  illustrate  their  con- 
tention by  a  single  example. 

This  truth  is  further  illustrated  and  established  by  the  follow- 
ing tabulated  statement,  prepared  by  the  Treasury  Department 
and  issued  in  Circular  123,  pages  53,  54,  which  gives  the  per  capita 
circulation  in  the  United  States  since  1800: 

2763 


100 


statement  of  the  specie  and  bank-note  circulation  of  the  United  States  in 


Year. 

Number 
of  banks 

and 
branches. 

Estimated 

bank  notes 

outstanding. 

1800 

$10,500,000 
28,000,000 
44,800,000 
61,0(]0,000 
77, 000,  (XX) 
91,500.000 
91..500.»HX) 
94, 8^39.  .570 
103,692,495 
140,3:11,038 
149,18.5,890 
116,138,910 
135,170,995 
106,968,572 
107,290,214 
83,7  4,011 
58,563,608 
75,167.646 
89,608,711 
105,552.427 
1^5,519,766 
128,506,091 
114,741^,415 
131,366,526 
155,16,5,251 
171.673,000 
188,181,000 
204,689,207 
186,9.52.223 
195,747,950 
214,778,822 
15.5,208,344 
193,306,818 

1810 

1820 

18;^) 

1831 

1«32 

l«3;j.. 

WM 

.506 
704 
713 
788 
829 
840 
901 
784 
692 
691 
696 
707 
707 
715 
751 
782 
824 
879 

1835 

1836 

1837 

1838 

1839 

1840 

1841 

1842  . 

1843 

1844 

1845 

1846 

1847. 

1848 ...             

1849 

1850 

1851 

1852 

1853 

1854 

1,208 
1,307 
1,398 
1,416 
1,422 
1,476 

1855 : 

1856 

1857 

18.58 

1859 

2763 


101 


tM  years  specified  from  1800  to  1859,  with  amount  of  circulation  per  capita. 


Estimated 
specie  in 
United 
States. 

Total  money 

in  United 

States. 

Specie  in 
Treasury. 

Money  in 
circulation. 

Population. 

Per 

capita. 

$17,500,000 

$28,000,000 

a$l,500,000 

$26,500,000 

5,308,483 

$4.99 

30,n!K),000 

58,000,000 

a3, 000,000 

55,000,000 

7,239,881 

7.60 

24,  m).  000 

69,100,000 

0  2,000,000 

67,100,000 

9,633,822 

6.96 

32,10(1,000 

93,100,000 

5, 755, 705 

87,344,,'J95 

12,866,020 

6.69 

32,100.000 

109,100.0(X) 

6,014,540 

93,0a5,460 

1?,,  221, 000 

7.04 

30,4<lO,(X)0 

121,900,000 

4,502,914 

117,397,036 

13,590,000 

8.64 

30, 050, 000 

122,150,000 

2,011,778 

120,138,222 

13,974,000 

8.60 

41,000,000 

ia5,839,570 

11,702,905 

124,136.665 

14,373,000 

a.  64 

51.000.000 

154,692,495 

8,892,&58 

145,799,637 

14,786,000 

9.86 

65,OtX).000 

2a5,301,038 

a  5, 000. 000 

200,301,038 

15,213,000 

13.17 

73,000,000 

222,185,890 

a5,000,(XI0 

217.185,890 

15,655,000 

13.87 

87,500.aX) 

203,638,910 

a  5, 000, 000 

198,638,910 

16,112,000 

12.33 

87,rj00.000 

222,170,995 

2,466,962 

219,704,033 

16,584,000 

13.26 

83,000,000 

189,9f58,572 

3,663,084 

186,305,488 

17,069,453 

10.91 

80,000,000 

187,290,214 

987,345 

186,302,869 

17.591,000 

10.59 

80,000,000 

163,734.011 

230,484 

163,503,527 

18,132,000 

9.02 

90,000,000 

148,56:j,608 

1,449,472 

147, 114, 136 

18,694,000 

7.87 

100,000,000 

175.167,r>46 

7,857,380 

167,310,266 

19.276,000 

8.68 

9«, 000, 000 

185.608,711 

7,658,306 

177,950,405 

19,878,000 

8.95 

97,000.(X)0 

202,552,427 

9,126,439 

193,425,988 

20,500,000 

9.43 

120,000,000 

225.519,766 

1,701.251 

223,818,515 

21,143,000 

10.59 

112,000,000 

240,506,091 

8,101,353 

232,404,738 

21,805,000 

10.66 

120,(;00,000 

234,743,415 

2,184,964 

232,558,451 

22,489,000 

10.34 

154,aX),0tX) 

285,366,528 

6,604,544 

278,761,982 

23,191,876 

12.03 

186,000,000 

341,165,251 

10,911,646 

330,253,605 

23,995.000 

13.76 

204,000,000 

375,673,000 

14,632,1;% 

361,040,864 

24,802,000 

14.63 

236,(XX),CM)0 

424.181,000 

21,942,893 

402,238,107 

25,615,000 

15.80 

241,000,000 

445,689,207 

20,137,967 

425,551,240 

2^,433,000 

16.10 

250,000,000 

436,952,223 

18,931,976 

418,020,247 

27,256,000 

15.34 

250.  (XX),  000 

445,747,950 

19,901.325 

425,846,625 

28,083,000 

15.16 

260,000,000 

474, 778, 822 

17, 710, 114 

457,068,708 

28,916,000 

15.81 

260,000,000 

415,308,344 

6,398,316 

408,810.028 

a9, 753, 000 

13.78 

250,000,000 

443,306,818 

4,339,276 

438,967,542 

30,596,000 

14.35 

a  Specie  in  Treasury  estimated. 


2763 


102 


statement  of  the  coin  and  paper  circulation  of  the  United  State* 


Year. 


1«61 
1W)3 
1SG3 
1864 
i*i5 
)8t)6 
1807. 
].Sd8. 
1869 
187U. 
1871. 
1872. 
1873. 
187-t. 
1875 
l«7tt 
1877 
1878. 
1879. 
1880. 
1881. 

188a. 

1883. 
1884. 
1885. 
188G 

1887, 
1888. 
l!S89. 
1890. 
1891. 
1892. 
1893. 
Ih94 
1895. 


Coin 
in  United 
States,  in- 
cluding: 
bullion  in 
Treasury. 


$2ai 
25() 
25 
25 
25 
25 
25 
25 
25 
25 
2;-) 


,000.000 
,()OtJ,000 
,0<K1.(>00 
,(K)0.(HJO 
,(K)0,(HK) 
,(KXJ,OI)0 
,(KX),UX) 
,(XW.(HJO 
,(XH),()00 
,000,000 
,000.(K)0 
.(KX).(KK) 
,0(X).000 
,<M)(J,(X)0 
,000,000 
,(X)0.000 
,418,734 
,837,506 
,047,907 
,268,178 
,;363.884 
.868,682 
.974,8:39 
,740,048 
,06H,939 
,175,823 
,027,at4 
,513,901 
,391,690 
,612,434 
,471.6;38 
,  185, 054 
,854,331 
,413,  .584 
,543.158 
987,506 
,618,792 


Paper  money 

in  United 

States. 


$207, 102, 477 
202.  (KJ5,  767 
33:i.  452. 079 
649.867,283 
680.588,0(57 
745. 129,  755 
729.327,254 
^o:i.2(W,612 
691. 55;}.  578 
6i*J,  35 1,180 
697,8(W,461 
716.812.174 
737. 72:1, 5()5 
749,44>i,6l0 
7X1,024,781 
773,27:1,509 
738,264.550 
697,216.341 
689,205,669 
fi91,253,3ti3 
711,56.1,313 
7.58,67:1,141 
776,  ,5J>6, 880 
87:},  74^,  768 
904,:}8.5.250 
945, 482,  .513 
905,532,390 
892,928,771 
970.5tH,259 
974,738,277 
991,754.521 
1,0:32,039,021 
1,139,745,170 
1,10«»,  988,808 
1,168,891,623 
1,137,619,914 
1,120,012,536 


Note  1. — Specie  payments  were  suspended  from  January  1,  1862,  to  Janu- 
ary 1, 1879.  During  the  greater  part  of  that  period  gold  and  silver  coins  were 
not  in  circulation  except  on  the  Pacific  Coast,  where,  it  is  estimated,  the  specie 
circulation  was  generally  about  $25,000.(100.  This  estimated  amount  is  the  only 
coin  included  :n  the  above  statement  from  1862  to  1«75,  inclusive. 

NoTK  2.— In  1876  subsidiary  silver  again  came  into  use,  and  is  included  in 
this  statement,  beginning  with  that  year. 
2i763 


103 


from  ISGO  to  1896,  inclusive,  with  amount  of  circulation  per  capita. 


Total  money. 

Coin,  bul- 
lion, and 

paper 
rao  ey  in 
Treasury. 

Circulation. 

Population. 

Money 

in 
United 
Slates 

per 
capita. 

Circu- 
lation 

per 
capita. 

$442,102,477 

$0,695,225 

$435.407,2.52 

31,443,321 

$14.06 

$13.85 

45:2. 005,  767 

3.(500,000 

448.405.767 

32,0(54,000 

14.09 

13.98 

a5a.4o:i.o79 

2:1,  754.  im 

334.697.744 

32.704.(X)0 

10.96 

10.23 

674. 8(57.  :.'8:} 

79.47:3.24.5 

595,;J94,0:^ 

a}.;365, 000 

20.23 

17.84 

705,588.0157 

a"),  94  5, 589 

(569.(541.478 

34,046.(XK) 

20.72 

19.67 

770.1»'9.755 

55,426,760 

714. 7(  ►2,995 

34,748.000 

2:1  16 

20.  .57 

754,  :i:i7, 2.54 

80.8:W.(J10 

673, 48.;,  .244 

a5,  469. 000 

21.27 

18.99 

728,:.'(K).6l:i 

66. 208, 543 

661,992.069 

3(5.211.(K)0 

20.11 

18.28 

716, 55.},  578 

36.449.917 

(580,  KK}.  661 

36. 973.  (KM) 

19.38 

18.  a9 

715.;i'.l.l8U 

50.898.289 

664,  4.52. 891 

;^7,  7.56. 000 

18.95 

17.(i<J 

72:^  8»58.  461 

47.6rw.667 

675,212.794 

38.5.58.:J71 

18. 73 

17.50 

741.812,174 

2.5. 92:}.  169 

715,889,005 

39,  .555. 000 

18.75 

18.10 

762,721,5(55 

24.412,016 

738,30!i.549 

4(4, 596.  (KX) 

18.70 

18.19 

774,445.610 

22,515:1801 

7.51.881,809 

41,(577,000 

18.58 

18.04 

806,024.781 

29,941.7.50 

776. 08;},  031 

42,  79a,  000 

18.83 

18.  13 

798.27:J.;50'.» 

44.171,5rt2 

754.101,947 

43,951.000 

18.16 

17.16 

790.68.1.284 

63,073,896 

727,(509,388 

45,137,000 

17.  .52 

16.  12 

7t>).  O')o.  847 

40. 7:}8, 9154 

722,314,88.3 

46.;r);3.ooo 

16.46 

15.  .58 

791, 2;  vJ.  576 

ft2.120,iH2 

729, 1:32.6:  }4 

47,598,000 

16.(52 

15.32 

l,0:-)1.5,-il.r4l 

2:52. 889. 748 

818.6:31,793 

48,8(5(5.000 

21. 52 

16.75 

1.2<l:"».92H.  i>.»: 

2:}:.'.  .546. 909 

973.:}82,2:J8 

50,  155, 783 

24.0-1 

19.  41 

1.4<;6.54l.82:i 

■21>2.;}0£},704 

l,114,2:}8,119 

51.31f).(H)0 

27.41 

21.71 

1,  480, 5:51,  71  !• 

3)6.241. 3(J0 

1.174,2140.419 

52,495.0(K) 

28.20 

22:37 

l,64:}.4«l.81ti 

41:1  184, 120 

1. 2:30.  ;30.5. 696 

53,693,0(M) 

;30. 60 

22.91 

l,7t»5,4.'H,l8H 

461,528.2211 

1.24:3.92.5.969 

54.911.000 

31.0*5 

22.65 

1,817, 658,  o3. 

525. 089, 721 

1,292.  .568. 615 

56.148.000 

,32.37 

2:3.  (r2 

1 .  808,  .5.M».  69 1 

55;'),  8.59, 169 

l,2.-)2.7()0,.52.'. 

57.4(t4,000 

31.5(1 

21.82 

1,900.442,672 

582,lX«,525t 

1,317.539.14:1 

58.().s(J.0O0 

;S2.a9 

22.45 

2,002.955.949 

69(4.  785, 079 

1,;372, 170,870 

59.974.000 

:u.  m 

12.88 

2  O75.a-.0.711 

(5!>4.989.0«)2 

1,38I,;}^51.(549 

61.289,000 

;3;i.86 

22.52 

2.  144.2215.  l.V. 

;i  (.974.88*' 

l,4:i!l,2;-)l,27(» 

62,622,2.50 

;34.24 

2:^.  82 

2.  I  a-..  224, 07. -> 

69r.78:},36.>« 

1.497.440.707 

6:3. 97.5. 0(K) 

;u.3i 

2:3.41 

2.:}72..5!«l,5(i: 

771.2.52,314 

1.(501.  ,347. 187 

65, 520. 0(J0 

3(5. 21 

:^4.44 

2.:}2:i.4<rj.3'.i 

72).  701.  14', 

1,59(5,701.245 

66.946.(XK.t 

;34.70 

2:3. 85 

2.420.  4.}^t,7>! 

7.59,626.07; 

1,6(:0  898,70,^ 

(•i8,;397,0(H» 

;3.5.39 

24.28 

2.  ;«>.s.  (507,  421 

79(5.  t5;:8.  9i: 

1,601. 9(^.8. 4;;i 

69, 87.S,  (JOO 

;34.:3;3 

22.93 

2,.U5.r.;^l.:fc.~ 

.s;}9,(Khl.3(t 

l.;5(H5,6;31.02 

71.;390.00() 

;32.86 

21. 10 

Note3.— The  coinage  of  standard  silver  dollars  began  in  1878,  under  the 
act  of  February  28.  1878. 

Note  4.— 8])ecie  payments  were  resumed  January  1,  1879,  and  all  gold  and 
silver  coins,  as  well  as  gold  and  silver  bullion  in  the  Treasury,  ai'e  included 
in  this  .statement  from  and  after  that  date. 

Note  5.— This  table  repi-esents  the  circulation  of  the  United  States  as  shown 
by  the  revised  statements  of  the  Treasury  Department  for  June  30  of  each  of 
the  years  specified. 
27  03 


104 


CIRCULATION  IN  UNITED  STATES  AT  DIFFEIIENT  PERIODS  COMPARED  WITH 

PRICES. 

Although  prices  were  high  during  the  first  years  of  the  century, 
our  per  capita  circulation  was  about  $5.  While  prices  fell  very 
much  about  1840,  our  per  capita  circulation  had  doubled.  Again, 
if  the  circulation  from  1863  to  1878  be  reduced  to  the  gold  stand- 
ard, the  result  would  be  as  follows: 


1803. 
18(53. 
1804. 
18G5. 


9.0,1 
12. 29 

9.67 
13.08 


1871. 
1872. 
1873. 
1874. 
1875- 
1876. 
1877. 


10.19 
16.18 
15.85 
16.29 
14.92 
14.47 
15.19 


1878 15.19 


1860 13.48 

1867 13.23 

186.S 13.  ]6 

1869 13.23 

1870 15.22 

It  will  be  observed  that  there  is  about  50  per  cent  more  money 
in  circulation  per  capita  to-day  than  in  1873,  and  yet  average  prices 
were  about  20  per  cent  higher  in  1873  than  they  are  to-day,  mak- 
ing a  divergence  of  about  70  per  cent— just  the  reverse  of  what  the 
free-silver  advocate  tells  us. 

CIRCULATION    IN     DIFFERENT    SECTIONS    OF    THE    UNITED    STATES    TO-DAT 
COMPARED  WITH   PRICES. 

Finally,  let  us  compare  the  present  monetary  conditions  of  some 
of  our  States  in  different  sections  of  the  country: 


Capital, 

State. 

Capital. 

Surplns. 

Deposits. 

Popula- 
tion. 

surplus, 
and  de- 

posits per 

capita. 

Rhode  Island 

$19,947,000 

$6,237,000 

$36,510,000 

345,000 

$129.37 

New  York 

555,519,()(H) 

206. 256,  (XK) 

1,869,343,000 

5,998,000 

438.66 

North  CaroUna.. 

5,394,000 

1,087,000 

10,618,000 

1,618.000 

10.56 

Mississippi 

3,518,000 

715,000 

9,560,000 

1,290,000 

10.69 

Arkansas 

5,154,000 

856,000 

8,313,000 

1,128,000 

12.69 

South  Dakota... . 

4,486,000 

715,000 

8,194,000 

329,000 

40.71 

"Washington 

17,388,000 

4,231,000 

19,144,000 

850,000 

116.46 

The  actual  money  per  capita  would  probably  not  exceed  20  per 
cent  of  the  capital,  surplus,  and  deposits,  or  25.87  for  Rhode 
Island;  87.732  for  New  York;  2.11  for  North  Carolina;  2.13  for 
Mississippi;  2.53  for  Arkansas;  8.14  for  South  Dakota,  and  23.29 
for  Washington. 

It  must  be  admitted  by  every  candid  man  that  if  there  were 
any  relation  between  the  per  capita  circulation  and  prices  every- 
thing in  Rhode  Island  would  be  12  and  everything  in  New  York 
43  times  higher  than  in  North  Carolina  or  Mississippi,  although 


105 

as  a  matter  of  fact  a  vast  amount  of  mannfactures  are  shipped 
to  the  two  latter  States,  while  their  products  in  turn  are  higher 
in  the  Eastern  States,  to  which  they  are  sent  for  a  market. 

So  we  find,  both  in  comparing  the  different  nations  of  the  earth, 
taking  our  own  history  for  a  hundred  years  and  the  relative  con- 
ditions of  our  several  States  to-day,  there  is  absolutely  no  relation 
between  the  amount  of  money  in  circulation  and  prices. 

THE  POORER  OR  CHEAPER  PIECE  OF  METAL.  WILL  ALWAYS  DRIVE  OUT  THE 
BETTER  OR  DEARER. 

Fourth.  There  is  no  country  to-day  with  the  free  coinage  of  gold 
and  silver  that  is  not  upon  a  silver  basis  exclusively,  with  no  gold 
whatever  in  circulation. 

Fifth.  There  has  never  been  a  time  anywhere  in  the  world  when 
free  coinage  was  given  to  two  metals  that  they  circulated  side  by 
side  evenly,  neither  displacing  the  other,  but  on  the  contrary  the 
invariable  result  has  been,  without  a  single  exception,  that  the  so- 
called  bimetallism  brought  about  absolute  monometallism — the  use 
of  that  dollar  only  which  was  made  of  the  cheaper  quantity  of 
metal. 

W.  A.  Shaw,  in  his  History  of  Currency,  page  178,  says: 

The  second  idea  which  is  commonly  entertained  with  regard  to  the  action 
of  France  during  this  later  period,  viz,  that  her  action  secured  for  the  world 
at  large  a  fixed  and  steady  ratio,  is  equally— indeed,  still  more— fallacious. 
At  no  point  of  time  during  the  present  century  has  the  actual  market  ratio, 
dependent  on  the  commercial  value  of  silver,  corresponded  with  the  French 
ratio  of  15J  and  at  no  point  of  time  has  France  been  free  from  the  disastrous 
influence  of  that  want  of  correspondence  between  the  legal  and  the  commer- 
cial ratio.  The  opposite  notion,  which  prevails  and  finds  expression  in  the 
ephemeral  bimetallic  literature  of  to-day,  is  simply  due  to  ignorance. 

NATURAL,     NOT    COINAGE,     LAWS    DETERMINE    THE    RELATIVE    VALUE    Ol" 

METALS. 

One  might  pertinently  inquire  if  the  attempt  on  tho  part  of 
France  to  maintain  a  parity  after  1803  had  the  tendency  of  bring- 
ing the  commercial  and  legal  ratio  of  gold  and  silver  together, 
although  they  never  remained  together  for  a  day,  what  was  it 
that  kept  them  just  as  nearly  together  for  two  hundred  years  prior 
to  1803?  Is  it  not  evident  that  what  she  attempted  to  do  had  abso- 
lutely no  influence  whatever  upon  the  commercial  value  of  either 
metal? 

METAL  BASIS  OF  GOLD  AND  SILVER  COUNTRIES  COMPARED. 

Sixth.  By  referring  to  the  above  table  and  carefully  comparing 
the  seven  silver  countries,  which  are  the  most  inferior  in  com- 

2763 


106 

merce  and  civilization,  with  the  twenty-seven  gold-standard 
countries,  which  contain  all  the  leading  nations  of  the  world,  it 
will  be  found  that  the  metal  basis  in  value  and  per  capita  circu- 
lation of  the  gold-standard  countries  is  incomparably  broader 
than  the  basis  of  the  silver-standard  countries.  Therefore  when 
we  are  regaled  with  the  fears  of  the  bimetallist  that  there  will 
not  be  base  enough  for  the  commerce  of  the  world  in  the  use  of 
gold  alone,  it  is  to  be  observed  that  it  is  physically  impossible  to 
have  two  bases,  and  as  between  the  two,  gold  has  proven  incom- 
parably the  broader  and  better  base,  and  up  to  the  present  time 
has  been  found  in  sufficient  quantity  to  meet  every  commercial 
burden  or  demand  laid  upon  it,  and  proven  itself  to  be  peculiarly 
suited  to  meet  all  of  the  requirements  of  trade  and  the  financial 
systems  of  the  entire  world,  always  keeping  pace  with  its  gradu- 
ally increasing  use. 

PRODUCERS  SWINDLED  THROUGH  THE  SILVER  STANDARD. 

It  is  also  certain  that  whenever  we  have  left  the  gold  standard 
or  trifled  with  it,  we  have  gravitated  certainly  and  irresistibly  to 
a  lower  standard— silver  or  paper— and  thereby  been  thrown  out  of 
joint  with  all  the  rest  of  the  commercial  world,  and  have  been 
compelled  to  pay  enormously  for  the  privilege  of  doing  business 
upon  any  other  standard  on  account  of  the  speculation  in  exchange. 
It  is  not  too  much  to  say  that  on  our  approximate  two  billion  of 
foreign  business  there  would  be  a  loss  of  at  least  $250,000,000 
which  our  producers  would  have  to  bear,  while  all  our  domestic 
commerce  would  be  subjected  to  the  jugglery  of  the  middlemen, 
and  the  producers  of  this  country  would  be  robbed  right  and  left 
under  the  pretense  of  a  risk  that  silver  might  fall.  Facing  these 
incontrovertible  facts,  can  any  candid  man  of  intellect,  common 
sense,  and  patriotic  inspiration  find  one  single  reason  why  we 
should  hesitate  for  a  moment  about  our  policy? 

What  we  want  above  all  thmgs  is  an  unequivocal  standard  of 
value,  the  standard  of  the  civilized  world,  and  a  system  of  cur- 
rency constantly  redeemable  in  that  standard,  and  one  which  will 
respond  to  trade  everywhere  and  at  all  seasons  of  the  year,  insur- 
ing low  rates  of  interest,  equal  privileges,  and  equal  justice  every- 
where. Free  coinage  will  not  bring  a  single  one  of  these  things, 
but  in  their  stead  doubt,  disaster,  losses,  and  ruin  incomprehen- 
sible. 


107 

HAS  THB  SELECTION  OF  THE  GOLD  STANDARD  WORKED  INJUSTICE. 

But  has  the  selection  of  the  gold  standard  by  all  the  civilized 
world  resulted  in  injustice  to  the  people  or  any  part  of  them?  If 
so,  that  injustice  should  be  righted. 

If,  however,  some  have  suffered  by  the  adoption  of  the  gold 
standard  only  as  others  have  suffered  in  all  countries  and  all  ages 
on  account  of  some  important  discovery  or  process  which  has  bene- 
fited the  great  mass  of  the  people,  relief  should  not  be  demanded 
or  expected. 

It  is  claimed  by  some  that  gold  has  appreciated  and  is  appreciat- 
ing to-day,  and  because  of  this  fact,  and  just  in  proportion  to  that 
appreciation,  the  debtor,  who  must  pay  his  obligations  in  gold 
values,  is  injured.  If  there  has  been  any  appreciation  in  the  value 
of  gold  then  it  is  true  that,  to  the  extent  of  such  appreciation 
during  the  time  the  debt  of  any  individual  has  been  running,  such 
debtor  has  been  injured. 

LIFE  OF  BANK  LOANS. 

But  the  average  length  of  bank  loans  does  not  exceed  sixty  days, 
and  no  one  will  contend  that  there  ever  has  been  such  an  apprecia- 
tion in  that  length  of  time,  at  least  that  any  man  can  estimate  it 
if  there  has  been  any ;  therefore  all  bank  loans  may  be  dismissed 
from  any  further  consideration. 

LIFE  OF  REAL  ESTATE  LOANS. 

The  average  life  of  loans  upon  real  estate,  farms,  and  city  prop- 
erty is  approximately  about  three  j^ears.  Now,  can  anyone  say 
that  gold  has  appreciated  during  any  given  three  years  to  an  ap- 
preciable degree?    If  so,  in  what  three  years? 

GOLD  APPRECIATION  OR  DEPRECIATION. 

How  shall  this  question  of  appreciation  of  gold  be  tested?  Cer- 
tainly all  will  agree  that  the  most  reliable  standard  is  human 
labor.  Measured  by  this  standard,  has  gold  risen  or  fallen?  That 
is  the  question.  According  to  the  Senate  report  called  the  Aldrich 
report,  it  will  be  discovered  that  wages,  measured  in  gold,  have 
more  than  doubled  since  1840.  For  the  information  of  those  de- 
siring to  know  the  exact  and  whole  truth  with  regard  to  this 
question.  I  submit  the  following  table,  found  on  page  176,  volume 
3,  of  that  mo3t  exhaustive,  comprehensive,  and  valuable  report 
ever  made  upon  the  subject  of  wages,  prices,  and  transportation: 

2703 


108 


WAGES  FOR  FIFTY  YEARS. 

Relative  wages  in  all  occupations,  18U0-1S91,  grouped  by  different  methods. 


Year. 

Simple 
average. 

Average 
accord- 
ing to  im- 
portance. 

1840 

87.7 
88 
87.1 
86.6 
88.5 
86.8 
89.3 
90.8 
91.4 
92.5 
93.7 
90.4 
90.8 
91.8 
95.8 
98 

99.3 
99.9 
98.5 
99.1 
100 
100.8 
1C2.9 
110.5 
120.6 
143.1 
152.4 
157. 0 
159. 6 
162 
163.3 
l(>3.6 
166 
1G7.1 
161. 5 
158.4 
152.5 
144.9 
143.5 
139.9 
U1.5 
146.5 
149.9 
152.7 
152.7 
150.7 
150.9 
1.53. 7 
155.4 
156.7 
158  9 
160.7 

83  5 

1841 

79  9 

1842 

84.1 

83 

IsS....: 

1844 

83  3 

1845 

85  7 

1846 

89  1 

1847 

91  3 

1848 

91  6 

1849 

90  5 

1850 

90  9 

1851 

91  1 

1853 

91  8 

1853        

93  3 

1854 

95  3 

1855 

97  5 

1856 

98 

1857 

99  2 

1858 

97  9 

1859 

99  7 

1860 

100 

1861 

100  7 

1863 

103  7 

1863 

118  7 

1864 

134 

1865 

148  6 

1866 

155  6 

1867 

164 

1868 

164  9 

1869 

167  4 

1870 

167  1 

1871 

166  4 

1873 

167  1 

1873 

166  1 

1B74 

163  5 

1875 

158 

1876 

151.4 

1877 

143  8 

1878 

140  9 

1879 

139  4 

1880 

143 

1881 

150.7 

1883 

153  9 

1883 

159.3 

1884 

155.1 

1885 

1.55  9 

1886 

155.8 

1887 

156.6 

1888 

157.9 

1889 

163.9 

1890 

168.2 

1891 

168.6 

2763 


109 

Premium  on  gold  and  gold  value,  of  United  States  legal-tender  notes  from  1869 
to  January  2,  1879. 


Year. 

Average 
currency 
value  of 
gold  each 
calendar 
year  dur- 
ing sus- 
pension of 

specie 

payments, 

Jan.  1,1862, 

to  Jan.  1, 

1879. 

Average 
gold  value 
of  United 

States 
notes  each 
calendar 
year  dur- 
ing sus- 
pension cf 

specie 

payments, 

Jan.  1, 1863, 

to  Jan.  1, 

1879. 

Year. 

Average 
currency 
value  of 
gold  each 
calendar 
year  dur- 
ing sus- 
pension of 

specie 

payments, 

Jan.  1, 1862, 

to  Jan.  1, 

1879. 

gold  value 
of  United 

States 
notes  each 
calendar 
year  dur- 
ing sus- 
pension of 

specie 

payments, 

Jan.  1,1862, 

to  Jan.  1, 

1879. 

1863 

113.3 

145.3 

103.3 

157.3 

140.9 

133.2 

130.7 

133 

114.9 

88.3 

68.9 

49.2 

63.6 

71 

72.4 

71.6 

75.3 

87 

1871 

111.7 
112.4 
113.8 
111.2 
114.9 
111.5 
104.8 
108 

89.5 
89 
87.9 
89.9 

87 

1863 

1873 

1864 

1873 

1865 

1874 

1866 

1875 

1867 

1876 

89.8 
85.4 
99  2 

1868 

1877 

1869 

1878 

1870 

APPRECIATION  TKSTED  BY  WAGES. 

When  it  is  recalled  that  these  are  the  wages  in  currency  from 
1862  to  1878  it  will  be  found  upon  examination  that  while  wages 
appear  in  the  table  to  have  been  about  as  high  in  1873  as  1891, 
they  were  in  fact  lower  by  12  per  cent,  or  were  only  $1.46.  When 
account  is  taken  of  the  disturbance  of  both  wages  and  prices 
caused  by  the  war  it  will  be  found  that  from  1840  to  1892  there 
was  a  constant  gain  in  wages  paid  in  gold,  and  when  the  statistics 
for  1892  have  been  gathered  it  will  be  found  that  the  average  wages 
paid  that  year  will  approximate  $1.75  per  day,  the  highest  ever 
paid  to  man,  and  that,  too,  in  the  best  money  in  the  world. 

GOLD  FALLEN  OXE-HALF,  OR  WAGES  DOUBLED  SINCE  1840. 

The  inevitable  conclusion  from  these  facts  is  that  either  wages 
have  more  than  doubled  since  1840  or  gold  has  fallen  or  depre- 
ciated one-half  in  value. 

Again,  let  us  test  the  question  of  appreciation  of  gold  by  a  com- 
parison of  charges  for  its  use.  We  all  know  that  any  commodity 
falls  when  abundant  as  compared  with  the  demand  and  rises 
when  scarce  in  comparison  with  the  demand. 

APPRECIATION  TESTED  BY  THE  INTEREST  ON  GOVERNMENT  BONDS. 

Gold  was  scarce  and  dear  during  the  war,  the  rate  of  interest 
paid  in  currency  being  more  than  15  per  cent  at  times.    To-day 
the  Government  could  borrow  gold  at  2  per  cent  per  annum  if 
2763 


no 

^ere  were  no  doubt  whatever  about  its  repayment,  as  is  evidenced 
by  the  fact  that  it  can  fund  its  entire  debt  into  a  2  per  cent  gold 
bond  because  that  very  act  would  forever  settle  our  standard  of 
value.  Therefore  gold  must  be  abundant  and  cheap  to-day  as 
compared  with  1873,  when  it  cost  more  than  three  times  as  much 
per  annum  for  its  use,  the  rate  of  interest  in  gold  then  being  more 
than  6  per  cent  per  annum.  It  will  be  noted  that  the  advocates 
of  free  silver,  when  discussing  this  question  of  appreciation,  never 
go  back  of  1873  nor  deal  with  wages,  the  most  reliable  test,  nor 
the  rate  of  interest,  but  force  upon  the  public  view  the  curse  of 
falling  prices— just  as  though  anything  could  be  too  cheap  in 
normal  conditions  when  you  want  to  buy! 

WHY  SILVER  HAS   FALLEN   MORE  THAN  GOLD. 

Gold  has  varied  much  less  in  value  than  silver  because  it  more 
nearly  represents  human  toil  as  distinguished  from  mechanical  or 
chemical  processes. 

This  truth  is  illustrated  by  the  fact  that  while  about  80  per  cent 
of  all  the  gold  now  produced  is  obtained  from  free  ores,  about  90 
per  cent  of  the  silver  is  produced  from  refractory  ores,  or  as  a  bi- 
product  of  other  metals. 

The  improved  methods  of  treating  low  grade  silver  ores,  which 
have  been  rendered  available  by  the  construction  of  the  trans- 
continental railroads,  has  given  a  downward  tendency  to  the 
prices  of  silver  which  will  not  stop  until  the  mines  of  Mexico  and 
South  America  have  been  brought  within  easy  reach  of  smelters 
by  transportation  lines,  and  the  commercial  uses  of  silver  have 
been  determined. 

The  present  probabilities  are  that  the  price  of  silver  will  con- 
tinue to  decline  until  it  reaches  about  25  cents  per  ounce,  or  a  ratio 
of  about  80  to  1  of  gold. 

THE   REAL   BATTLE  OF  MATERIAL  CIVILIZATION. 

Right  here  is  the  real  and  the  whole  battle  of  material  civiliza- 
tion, whether  the  producer  on  the  farm  or  in  the  factory  shall  get 
more  and  more  for  his  labor — tliat  is,  be  able  to  buy  with  the 
proceeds  of  his  toil  more  and  more  of  the  necessaries  and  comforts 
of  life.  It  follows,  therefore,  that  liigher  wages  are  in  inevitable, 
constant,  and  eternal  conflict  with  cheaper  products.  But  every 
human  faculty,  every  human  endeavor,  and  all  legislative  power 

2763 


IJl 

are  set  in  motion  to  cheapen  every  factor  that  goes  to  make  up  the 
things  we  all  want  to  buy,  for  nothing  is  cheap  enough  when  we 
are"  buying,  although  everything  is  too  cheap  when  we  are  selling. 
The  farmer  does  not  complain  because  his  implements,  which  cost 
him  only  one-third  of  what  they  did  twenty  years  ago.  are  now 
too  cheap.  The  mechanic  is  not  complaining  because  he  can  buy 
his  Sunday  suit  of  clothes  for  less  than  one-half  of  what  it  cost  him 
twenty  years  ago. 

ARE  LOW   PRICES  A  CURSE? 

Are  low  prices  a  curse,  then?  They  may  be,  but  only  when  they 
are  produced  at  the  same  or  an  increasing  expenditure  of  human 
labor.  When  the  necessaries  of  life  are  produced  at  a  lower  cost 
of  human  toil,  they  are  to  that  extent  and  must  be  a  greater 
blessing  to  the  human  race. 

Therefore,  if  the  prices  of  1891  were  about  what  they  were  in 
1840,  notwithstanding  the  almost  incalculable  advantage  in  new 
processes,  inventions,  discoveries,  methods,  and  means  of  trans- 
portation, with  wages  more  than  double  what  they  were  then,  the 
American  people  of  all  classes  have  certainly  gained  enormously 
in  the  struggle  of  life,  and  have  moved  upward  and  onward  in  the 
march  of  civilization. 

That  my  candid  readers  who  are  seeking  to  know  the  whole 
truth  about  this  matter  may  be  fully  inf  onned,  I  herewith  submit 
tabulated  statements  found  upon  pages  100, 106,  and  107,  volume  3, 
of  the  Senate  Report  on  Prices,  Wages,  and  Transportation. 

Again,  taking  1840  as  a  starting  point  and  100  as  a  basis,  com- 
parison is  made  for  fifty-two  years. 
27e3 


112 


Table  ^.—Relative  prices  of  agricul- 


Year. 


Barley. 


Clover 
seed. 


Corn. 


Cotton, 

upland, 

middling. 


Flax- 
seed. 


Hemp, 
rough. 


Hides. 


1840. 
1841. 
1842. 
1843- 
1844. 
1845- 
1846. 
1847- 
1848. 
1849. 
1850. 
1851  . 
1853  . 
1853. 
1854. 
1855. 
1856. 
1857  . 
1858. 
1869. 
1860. 
1861. 
1862. 
1863. 
1864. 
1865. 
1866. 
1867. 
18G8. 
1869. 
1870. 
1871. 
1872. 
1873. 
1874. 
1875  . 
1876. 
1877. 
1878. 
1879. 
1880, 
1881. 
1882. 
1883. 
1884. 
1885, 
1886. 
1887. 
1888. 
1889. 
1890 
1891 


83.1 
88.3 
70.8 
71.4 
73.4 
77.3 
81.2 
90.9 
100 
81.2 
101.9 
103.9 
98.7 
109.1 
151 
162.3 
161 
116. 9 
142.9 
111.7 
100 
84.4 
77.3 
168.8 
24(J.3 
165. 6 
181.8 
191. 6 
150 
178.6 
142.9 
120.1 
136.4 
178.0 
152.6 
149.4 
128.2 
110.4 
146.1 
129.9 
116.9 
149. 4 
122.1 


110.4 

100 

103.9 

102.6 

110.4 

89.3 
101 

92.9 


173.3 

96.7 
100 

55.2 
141.3 

88.3 
110 

98.3 
101.8 

83.3 

86.7 
118.3 
120 
13:3.9 
116.4 
135.2 
180.3 
176 
115.3 
120 
100 

99.4 
112.1 
123 
176.1 
326.1 
130 
226.6 
154.1 
209.3 
199 

i;m.7 

124 

114.3 

139.9 

151.4 

22.5.6 

200.9 

98.1 

84.7 

90.3 

112.1 

1U7.5 

187.3 

139.9 

114.4 

140.2 

97.3 

90.5 

115. 1 

78.5 

104.8 


85.1 
103. 3 
85.1 
74.9 
71.3 
83.6 


96.7 

112 

93.8 

95.3 

90.9 

102.5 

120.4 

109.8 

125.5 

99.6 

102.2 

104 

133. 8 

100 

79.3 

86.5 

128.2 

229.8 

132.4 

138.2 

192.7 

164.4 

141.1 

126.5 

110.5 

93.8 

97.1 

139.3 

96.4 

82.5 

84.7 

70.7 

76.4 

75.4 

109.3 

100.7 

90.2 

89.5 

71.5 

68.1 

7.5.1 

75.1 

57.8 

81.7 

89.1 


83.2 
85.5 
68.2 
78.6 
55.5 
70.5 
85.5 
107.5 
62.4 
97.1 
129.5 
84.4 
93.6 
98.8 
86.1 
91.3 
113.3 
143.4 
123.7 
106.4 
100 
198.8 
522.5 
781. 5 
1,119.1 
453.2 
365.3 
198.8 
247.4 
254.3 
156. 1 
182.7 
173.4 
169.9 
143.4 
121. 4 
101.7 
102.9 
99.4 
96 

106.4 

109.2 

105.8 

98.3 

93.6 

93.1 

87.9 

87.9 

96.5 

100.6 

96 

80.3 


74.5 

82.2 

68.6 

72  2 

83!  8 

95.4 

67 

68.4 

77.6 

80.9 

106.8 

87.5 

84.6 

96.4 

121 

123.1 

140.1 

90.7 

111.2 

98.9 

100 

88.8 

121 

196.3 

220.1 

22:3. 9 

232.8 

191.8 

205.3 

176.3 

154.8 

136. 3 

135.4 

143.4 

146. 1 

117.2 

97.8 

102 

111.9 

97.8 

97.9 

104. 9 

94.3 

107.1 

107.1 

90.3 

89.7 

87.9 

112 

110.8 

127.3 

82.8 


148 

80 

64 

56 

56 

50.4 

88 

92 
103 

80 

72 

78 


120 
124 

144 
100 
88 
100 


56 

84 
108 


188 
240 


160 

150 

176 

120 

84 

96 

128 

116 

88 

100 

76 

80 

104 

96 

84 


140 
108 
92 
76 
96 
104 
92 


93.5 
70.8 
58.1 
63.2 
70.3 
57.3 
50.1 
45.5 
51 

64.3 
70.7 
76.8 
75.7 
76.3 
95.7 
121.4 
112.1 
109.1 
108.9 
100 
IW 
118.3 

130. 5 
136.8 

99.3 
101.8 
109.9 
119.3 
124.7 
119.1 
124.6 
134.1 
128.2 
121 
110 

98.8 
114.3 
111.9 
109.8 

120. 6 

115. 7 
114.6 
103. 1 
105. 7 
104.5 

89.3 

98.4 

90 

74.8 

80.1 

70 


2763 


113 


tural  products— individual  products. 


Meat. 

Oats. 

Rye. 

Timothy 
seed. 

Tobac- 

Wheat. 

/-^  __       1 

Beeves. 

Hogs. 

Sheep. 

co. 

average. 

65.8 

50.5 

103 

79.6 

82.8 

94.1 

72.8 

87.3 

60.5 

54.8 

126.8 

89.2 

98.3 

91.2 

61.6 

91.4 

57.9 

53.3 

70.6 

75.8 

66.2 

55.9 

95.6 

72.8 

66.2 

43.5 

""40"' 

69.9 

80.3 

88.4 

58.8 

56.3 

65.2 

57.9 

.59. 8 

86.3 

84.7 

68.4 

58.5 

70.2 

73 

82.8 

61 

105.  9 

87.3 

81.6 

60.3 

71.2 

78.1 

89.4 

61.7 

100.  7 

100.6 

76.6 

57.4 

92.2 

79.3 

98.9 

75. 9 

'"Iq" 

142.5 

108.3 

87 

69.1 

81.4 

100.6 

86.9 

65.5 

89.5 

87.9 

101.4 

61.8 

88.3 

8:3.8 

83.1 

53.2 

94.1 

76.4 

107 

79.4 

78.3 

83.3 

97.2 

61.8 

111.1 

86.9 

120 

102.9 

76.4 

94.3 

118.9 

68.2 

"90*" 

104.6 

86.9 

117.2 

103.1 

70.2 

92.5 

134 

91.2 

80 

118.3 

109.6 

V)9.2 

73.5 

64.2 

94.8 

114.3 

92  A 

100 

127.5 

115.3 

86.3 

76.8 

81.7 

102 

12:3.2 

73.7 

120 

132.7 

152.9 

125.7 

78.5 

122 

114 

111.5 

102.6 

120 

117.0 

147.8 

125.6 

73.7 

1.52.4 

120. 6 

103.5 

92 

117.6 

108.3 

13:3.8 

124.1 

131.2 

126.4 

114.2 

104.9 

117.6 

89.2 

122.6 

174.4 

107 

119.4 

96.3 

74.2 

i;J4.6 

101. 9 

78.1 

134.4 

76.3 

106.4 

99.1 

82.1 

"66"' 

108.5 

103.8 

97.5 

1(X).7 

90.6 

102.3 

100 

100 

100 

100 

100 

100 

100 

100 

100 

93.9 

56 

85.3 

90.2 

87.3 

67.8 

95.3 

92.3 

91.7 

91.4 

58.7 

127.4 

150.3 

80.3 

71.9 

186.9 

86.7 

131.7 

110.3 

61.7 

137.4 

183.7 

138.5 

10:3.4 

178.3 

101.2 

176.6 

192.3 

186.3 

196.2 

227.5 

184.5 

211.6 

200.2 

116.4 

2.59.8 

212.9 

218.4 

174.3 

156.9 

127.4 

174.6 

125.8 

140.5 

194.6 

202 

16-5.1 

151 

149 

159.2 

m.  1 

107.7 

115.9 

171.7 

174.7 

110.3 

i;}9. 8 

WS.  7 

204.5 

109.4 

137.9 

213.4 

171.4 

158. 6 

150.4 

115.7 

189.5 

191.1 

127.1 

166.5 

193 

172.8 

179 

15;>.8 

126.8 

167.3 

148.4 

133 

168 

119.1 

162.4 

161 

IM.  3 

1.24.8 

i;}9. 9 

114.6 

212.3 

158.1 

84.7 

146.9 

143.2 

77.1 

119.8 

138.6 

118.5 

124 

187.5 

118.2 

130.4 

157 

80.6 

156.7 

115 

108.3 

139.4 

181 

118.5 

129.3 

137.6 

77.2 

127.2 

136.6 

113.4 

124.2 

215.5 

130.3 

132.6 

147.4 

103.3 

147.2 

158.8 

119.7 

114.5 

180.2 

121.5 

137.5 

154.3 

ia3.2 

146. 9 

117.6 

114.6 

107 

160.8 

94.6 

126.1 

128.6 

97.4 

1:37. 2 

112.4 

104.5 

76.7 

145.7 

101.3 

11.5.1 

118 

86.8 

131.2 

88.9 

94.9 

58.7 

148.9 

117.2 

110.7 

114.1 

60.8 

116.5 

75.8 

82.2 

73.9 

137.4 

106.6 

98.8 

124.8 

63 

121.5 

94.1 

101.9 

92.6 

119.3 

84.2 

98.4 

128.3 

8:3.6 

137.5 

110.1 

l:i2.3 

105. 1 

137.8 

112.3 

109.9 

155.3 

105.8 

149 

119.6 

140.8 

121.7 

134.4 

93.3 

121.1 

1(58.  8 

134.4 

137.4 

103.4 

101.3 

83.8 

141.1 

116.4 

114.4 

154.3 

82 

126.6 

92 

92.4 

56.3 

138.2 

88.8 

100.3 

160.1 

83.6 

126.5 

81.5 

88.2 

60.2 

152.6 

83.5 

104.7 

136.2 

68.3 

118.3 

86.6 

79 

76.3 

.    122.3 

71.1 

93.9 

129.1 

74.8 

124.7 

93.5 

70.1 

83.1 

100.6 

74 

96.5 

124.5 

81.2 

121.6 

92.6 

70.1 

96.9 

122.5 

73.6 

94.9 

140.7 

100.8 

125. 9 

78.1 

83.4 

75 

110.8 

71 

95.7 

111.2 

74.7 

140.5 

68.3 

63.7 

58.5 

122.2 

86 

91.3 

121 

70 

139 

114.7 

87.9 

58.9 

129.8 

70.8 

97.4 

138.1 

79.3 

137.8 

86.6 

123.6 

51.4 

140 

87.7 

97.1 

27C3-8 


114 

For  the  total  number  of  these  articles  gold  prices  were  calcu- 
lated. 

Table  30.— Relative  prices  in  each  year,  181*0-1801,  in  gold,  for  all  {223)  articles^ 
grouped  by  different  methods. 


Year. 

All  articles 

simply 
averaged. 

All  articles 
averaged 
according 
to  impor- 
tance, cer- 
tain ex  - 
penditures 
being  con- 
sidered 
uniform. 

All  articles 
averaged 
according 
to  impor- 
tance, com- 
prising 
68. 6U  per 
cent  of 
total 
expendi- 
tures. 

1840 

116.8 
115.8 
107.8 
101.5 
101.9 
103.8 
106.4 
106.5 
101.4 
98.7 
103.3 
105.9 
103.7 
109. 1 
113.9 
113.1 
113.3 
113.5 
101.8 
100.3 
100 
100.6 
114.9 
103.4 
133.5 
100.3 
13<).  3 
137.9 
115-9 
113.2 
117.3 
133.9 
137.3 
133 
119.4 
113.4 
104.8 
104.4 
99.9 
96.6 
106.9 
105.7 
108.5 
106 
99.4 
93 
91.9 
93.6 
94.3 
94.2 
93.3 
93.2 

98.5 

98.7 

90.1 

89.3 

89.8 

93.1 

96.7 

96.7 

92 

88.9 

93.6 

99.1 

98.5 

103.4 

103.4 

106.3 

108.5 

109.6 

109.1 

102 

100 

95.9 

100.3 

84.1 

96.1 

88.3 

114.3 

107.9 

108.8 

100.3 

107.5 

112.7 

112 

106.4 

108.2 

106.5 

102.4 

103 

101.7 

96,6 

103.4 

105.8 

100.3 

104.5 

101.8 

95.4 

95.5 

96.2 

97.4 

99 

95.7 
96.2 

97  7 

1841 

98  1 

1842  

90  1 

1813                               

84  3 

1844     

85 

184.')                 

88  2 

1846 

95.2 

1847          

95  3 

1848                                  

88  3 

1849    

83  5 

ia50               

89  2 

1851  

98  6 

1853            

97  9 

18.>J 

105.5 

1854      

105 

18.55                    ..            

109  2 

185(5  

112  3 

18r>7         

114 

1858        

113.2 

1859                      

102  9 

I860 

100 

1861              

94  1 

\mi 

101.6 

1863          

91.1 

18t>4                              

110  7 

1865 

107.4 

1866                    

134 

1867  

123.2 

1S68            

125.6 

1869                              .    .           

112  3 

1870        

119 

1871                     

122.9 

1873 

121.4 

1873                   

114.5 

1874                                                    .     . 

116.6 

1875            

114.6 

1876                                

108.7 

1877        

107 

1878                      ...     

1(J3.2 

1879 

95 

1880                  

104.9 

1881                                             

108.4 

1883 

109.1 

1883                 

106.6 

1884 

103.6 

],S85       

93.3 

1886                                           

93.4 

1887 

94.5 

1888        

96.2 

3889                                           

98.5 

1890 

93.4 

1891 

94.7 



2763 


115 


Relative   prices    by  five-year  periods,   Ifi'^O-lSOl,   for  all    articles  grouped  by 
different  methods. 


Periods. 

All  articles 

ainiply 
averaged. 

All  articles 
averayed 
accortling 
to  impor- 
tun.ie.  cer- 
tain ex- 
penditures 
being  con- 
sidered 
uniform. 

All  articles 
averaged 
according 
toiuipur- 

tance. 
compiis- 
ing  U8.00 
per  cent 
of  total 
expendi- 
tures. 

184(M4 

108.8 
103.2 
1UC.6 
108.2 
131.5 
178.8 
137.5 
110.  y 

ia5.3 

93.3 
92.3 

93.9 
93.3 
99.4 
107.1 
114 
156.5 
123.  G 
108. 9 
lot.  4 
93.7 
96 

91 

1845-40 

90.1 

185()-.>t          

{•9.1 

lS55-o9 

110.3 

l8«i(M)4 ..., 

120.5 

lStK>-«9          

182. 4 

1870-74 

134.4 

1875  7'.) 

112  9 

lSSO-8-l 

10(3.3 

188.V8D 

9.).  2 

1890-91 

-     94. 1 

FARM    PUODUCTS   LOWER  IN   1840  THAN   1891. 

To  ascertain  what  the  prices  were  in  gold  from  1862  to  1878,  in 
table  3cJ,  reference  should  be  had  to  the  table  already  referred  to 
on  page  109.  The  average  price  to  the  farmer  on  these  fifteen 
products  for  the  first  eight  years— 1840  to  1847,  inclusive— was 
69.6,  w^hile  the  average  price  for  the  same  jBfteen  products  for  the 
last  eight  years — 1884  to  1891— was  96.4,  or  more  than  38  per  cent 
higher  during  the  last  eight  years  than  the  former. 

BILVEK  AND  CROPS  BEAR  NO  REU4TION  TO  EACH   OTHER. 

When  due  consideration  is  given  to  the  resources  and  facilities 
of  the  farmers  to-day  as  compared  with  1840,  it  can  be  demon- 
strated that  each  man  can  accomplisu  twice  as  much,  which  is 
equivalent  to  doubling  the  prices  of  his  products.  We  are  con- 
stantly told,  you  will  remember,  by  the  advocates  of  free  coinage, 
that  prices  of  crops  ana  silver  always  rise  and  fall  together,  but 
when  we  recall  the  fact  that  silver  was  $1.32  per  ounce  in  1840, 
98  cents  in  1891,  and  is  oniy  63  cents  to-day,  we  must  be  convinced 
that  sucn  a  statement  has  not  a  scintilla  or  eviaence  upon  which 
to  rest. 

It  will  be  admitted,  for  the  sake  of  argument,  that  prices  have 
fallen  some  since  1873,  but  not  so  rapidly  as  prior  to  that  time,  as 
evidenced  by  the  foregoing  table,  although  silver  did  not  fall  at 
all  from  1864  to  1873,  the  period  of  greatest  fall  m  prices. 

27<« 


116 

It  remains  to  observe  in  this  connection  what  caused  the  low 
prices  from  1840  to  1845,  the  high  prices  from  1853  to  1873,  the  low 
prices  from  1885  to  1891,  and  the  still  lower  prices  from  1893  to 
1896.  » 

LOW  PRICES  OF  1840  EXPLAINED. 

At  the  close  of  the  Napoleonic  wars  in  1815  commenced  that  long 
peace,  during  which  the  working  force  of  the  world  recuperated 
for  a  quarter  ot  a  century  and  turned  its  entire  attention  and 
energy  to  the  production  of  those  things  that  were  needed  by  man- 
kind, and  so  successful  were  they  in  every  endeavor  that  they  made 
it  possible  to  obtain  the  necessaries  of  life  at  lower  prices  than  the 
world  haa  ever  before  enjoyed. 

HIGH   PRICES  OP  1863  TO  1883  EXPLAINED. 

Then  came  in  rapid  succession  those  military  events  which 
called  the  men  from  the  shop  and  the  field  and  converted  the 
great  producing  army  of  the  world  into  an  army  of  wasteful  con- 
sumers and  actual  destroyers  of  property  of  every  kind.  The 
war  with  Mexico  raised  prices  about  25  per  cent.  Then  followed 
the  revolution  in  Germany,  the  French  Revolution,  the  Crimea, 
the  war  of  Napoleon  111  to  make  Italy  "  free  from  the  Alps  to  the 
B3a,"  the  Franco-English  expedition  against  China,  the  great  rebel- 
lion in  the  United  States,  the  conquest  of  Mexico  by  Napoleon 
III,  tne  Franco-Prussian  war,  the  era  closing  with  the  Turko- 
Russian  war  in  1877.  Since  then  the  world  has  been  following 
exclusively  the  arts  of  peace  and  the  human  family  has  been 
unremittingly  devoting  itself  to  the  production  of  the  necessaries 
of  life,  ana  has  been  assisted  in  this  effort  by  the  most  marvelous 
discoveries  and  inventions  in  the  history  of  mankind.  The  result 
was  that  prices  of  everything  except  labor  continued  to  fall  in  a 
normal  and  natural  way,  as  they  should,  down  to  1892,  when  the 
prices  of  223  articles  in  most  common  use  again  reached  about  the 
same  level  of  1840,  as  indicated  in  the  tabulated  statement  No. 
30,  from  page  100,  volume  3,  Senate  report  on  prices,  wages,  and 
transportation.     (See  page  114.) 

RETROSPECT  OF  THE  CENTURY. 

Before  considering  the  period  between  1893  and  1897,  let  us  look 
backward  for  a  moment  from  1892  over  the  history  of  the  United 
States  and  consider  how,  if  in  any  way,  the  fall  of  prices  could 


117 

have  been  prevented,  and  how  now  the  exchangeable  valne  of  the 
products  of  the  United  States  can  be  increased.  Certainly  no  one 
will  deny  that  the  period  between  1879  and  1893  was  not  only  the 
most  prosperous  in  the  history  of  our  own  country,  but  the  most 
marvelous  in  development  and  advancement  ever  experienced  by 
any  people  in  the  nistory  of  the  world. 

HOW  TO  PREVENT  PRICES  FROM  TALLINO. 

In  the  light  of  the  past,  then,  the  exchangeable  value  of  the 
products  of  labor  could  only  have  been  kept  from  falling  from  1873 
to  1893  in  the  following  ways: 

First.  By  the  perceptible  mcrease  in  the  wages  of  the  producers 
of  the  333  articles  covered  by  the  above  tabulated  statement. 

Second.  By  a  disuse  or  destruction  of  a  very  considerable  num- 
ber of  those  methods  and  processes  by  which  all  the  necessaries 
of  life  have  been  greatly  cheapened. 

Third.  By  setting  one-half  of  the  human  family  to  killing  the 
other  half  and  destroying  and  wasting  a  considerable  portion  of 
the  accumulated  property  now  contributing  to  the  convenience 
and  comfort  of  mankind. 

But  will  any  of  the  advocates  of  higher  prices  urge  the  adop- 
tion of  either  of  the  last  two  methods?  Certainly  no  one  will 
withhold  his  hopes  that  the  first  may  continue  to  gain  until  the 
equitable  adjustment  or  labor  and  capital  is  reached. 

1840-1850  AND  1880-1890  COMPARED. 

When  one  compares  the  prices  from  1840  to  1850  with  the  prices 
from  1885  to  1891  and  finds  that  they  are  upon  identically  the 
same  level,  he  wonders,  in  the  face  of  all  recent  discoveries,  in- 
ventions, methods,  and  processes,  including  the  use  of  steam  and 
electricity,  why  prices  have  not  fallen  to  at  least  one-half  what 
they  were  in  the  earlier  period;  and,  indeed,  they  would  have 
done  so  but  for  the  simple  reason  that  as  rapidly  as  advantages 
have  been  gained  in  facilities  in  production  wages  have  constantly 
risen  until  now,  as  we  have  seen,  they  are  double  what  they  were 
in  1840. 

Certainly  no  frank  and  careful  investigator  will  claim  that  he 
can  discover  the  slightest  trace  of  the  effect  caused  by  silver  legis- 
lation upon  the  affairs  of  this  country  between  the  years  1840  and 
1891. 

2763 


118 

It  remains,  therefore,  only  to  inquire  into  the  events  since  1893 
and  ascertain  the  causes  of  our  misfortunes,  study  the  sources  of 
our  ills,  and  clearly  determine  the  factors  that  have  produced  the 
long-to-be-remembered  crisis  of  1893  and  mark  the  reasons  for  its 
painful  continuance. 

SPECULATION  BEQAX  IN  188i  AND  ENDED  IN  PANIC  IN  1893. 

Beginning  with  1884,  simultaneously  with  the  same  movement 
in  nearly  all  parts  of  the  civilized  world,  our  people  entered  a 
speculative  era  which  terminated  in  the  panic  of  1893. 

THE  CAUSES  01"  THE  PRESENT  CRISIS. 

During  these  nine  years  the  spirit  of  speculation  crept  over 
every  section  and  into  every  locality  of  the  land,  firing  the  gam- 
bling instinct  of  the  people  with  that  false  philosophy  that  some- 
thing can  be  made  out  of  nothing.  The  result  was  that  all  classes 
invested  their  fortunes  or  earnings  or  the  proceeds  of  mortgages 
upon  their  homes  in  the  construction  bonds  or  stocks  of  railroads, 
street-car  lines,  gas  companies,  or  bought  lots  cut  out  of  farms 
surrounding  every  city  and  village  in  the  land,  until  all  our  ready 
money  was  consumed  in  nonproductive  investments.  Finally 
every  man  became  frightened  at  his  neighbor's  condition,  credit 
was  universally  exhausted,  and  forced  liquidation  began  and  has 
been  going  on  steadily  ever  since. 

FREE  SILVER  WILL  NOT  ERADICATE  THE  OAMBLINa  INSTINCT. 

Certainly  no  one  will  claim  that  the  free  coinage  of  silver  will 
in  the  slightest  degree  relieve  this  situation  nor  eradicate  the  in- 
stinct that  makes  the  whole  human  family  gamblers  at  times. 

NATIONAL  CREDIT  IS  BTRAINXD. 

While  individual  credit  was  becoming  exhausted,  unfortunately 
for  our  nation  and  our  people,  the  Government  was  laying  a  break- 
ing strain  upon  its  credit  by  increasing  its  demand  obligations  at 
the  rate  of  fifty  millions  a  year,  without  increasing  its  reserve  to 
the  extent  of  a  single  dollar,  until  we  exhibited  to  the  world  ^he 
pitiable  spectacle  of  having  more  than  a  thousand  million  demand 
obligations  out  and  but  a  paltry  one  hundred  million  to  protect  it, 
which  in  more  conservative  days  we  thought  necessary  to  protect 
only  $346,000,000  of  United  States  notes. 


119 


FREE  COINAGE  WILL  NOT  STRENGTHEN  THE  CREDIT  OF  THE  NATION. 

Certainly  the  advocate  of  free  coinage  will  not  claim  that  the 
credit  of  the  Government  would  have  been  strengthened  by  an 
unlimited  amount  of  the  very  thing  that  was  fast  carrying  us  on 
to  repudiation? 

Weakened  by  the  expenditures  of  all  the  cash  accounts  of  the 
people  and  the  exhaustion  of  personal  credit,  and  with  our  national 
credit  strained  to  the  breaking  point,  we  were  in  no  condition  to 
bear  the  suspicion  that  this  nation  might  construe  the  word  ' '  coin  " 
to  mean  silver  as  well  as  gold,  thereby  compelling  our  creditors — 
indeed,  all  creditors — to  accept  50  cents  of  value  as  a  full  payment 
for  100  cents  of  obligation.  This  was  the  logical  and  inevitable 
result  of  the  free  coinage  of  silver;  hence  its  agitation  and  accom- 
plishment would  not  only  not  have  relieved  us,  but  plunged  us 
still  deeper  into  commercial  trouble  and  made  our  financial  ruin 
complete. 

TREE  COINAGE   WILL  NOT  PRODUCE  REVENUE  NOR  LESSEN  EXPENDITURES. 

Notwithstanding  this  combination  of  untoward  circumstances, 
which  called  for  the  highest  order  of  statesmanship  and  financial 
skill,  little  or  no  thought  was  given  to  the  real  problem  calling 
for  immediate  solution.  But  the  legislative  department  of  the 
Government  enacted  a  law  that,  either  because  of  what  it  prom- 
ised, threatened,  or  did  actually  do  in  failing  to  produce  sufficient 
revenue  to  support  the  Government  by  an  average  of  about  fifty 
millions  a  year  for  four  consecutive  years,  brought  this,  the 
wealthiest  and  most  powerful  nation  of  the  world,  to  the  very 
verge  of  bankruptcy,  dishonor,  and  eternal  shame.  Now,  it  can 
scarcely  be  believed  by  anyone  that  the  free  coinage  of  silver 
would,  on  the  one  hand,  have  increased  our  revenues  to  the  extent 
of  a  single  cent,  to  say  nothing  of  $300,000,000,  nor  reduced  our 
expenditures  a  single  cent,  to  say  nothing  of  $300,000,000. 

These  were  the  positive,  direct,  and  incidental  causes  that  led 
to  the  crisis  of  1893,  which  has  been  protracted  by  unnecessary 
war  cries  and  the  persistent  demand  of  a  portion  of  our  people 
that  the  Government  of  the  United  States  offer  its  people  in  the 
redemption  of  its  obligations  a  dollar  that  could  not  exceed  50 
cents  in  actual  value. 


120 


ACUTE  LIQUIDATION  WAS  NOT   RELIEVED    BY  A  PROPER  CURRENCY  SYSTEM. 

Severe  as  has  been  the  strain,  difficult  as  has  been  our  prob- 
lem, complicated  as  has  been  the  situation,  unfortunately  our 
currency  system  has  not  been  such  as  to  assist  in  relieving  us  in 
the  slightest  degree  from  the  consequences  of  acute  liquidation, 
but  on  the  other  hand  actually  precipitated  it  with  all  its  disas- 
trous results. 

FREE  COINAGE  WILL  NOT  GIVE  US  AN  ELASTIC  CURRENCY. 

Now,  no  one  who  is  at  all  familiar  with  the  science  of  exchange 
will  claim  that  the  free  coinage  of  silver  would  have  furnished 
the  one  essential  element — a  responsive  and  elastic  currency — 
which  might  and  probably  would  have  saved  us  from  the  shock  of 
panic  and  prevented  the  waste  and  destruction  in  values  that 
necessarily  follows  a  change  from  a  credit  to  a  cash  basis.  Herein 
lies  the  secret  and  full  explanation  of  the  ruinous  prices  of  the 
past  four  years,  and  therefore  no  student  of  a  judicial  tempera- 
ment will  attempt  to  draw  any  inference  from  these  abnormal 
times  upon  which  to  base  a  course  of  reasoning  that  he  can  apply 
to  natural  conditions. 

IF  HIGHER    PRICES  IS   THE    ONLY  OBJECT  WE  SHOULD    START    THE    PAPER 
MILLS  AND   PRINTING   PRESSES. 

From  this  review  of  nearly  sixty  years  of  our  history  we  are 
justified  in  concluding  that  not  a  single  theory  advanced  by  the 
advocate  of  free  coinage  is  substantiated  by  facts  established  by 
our  own  experience  or  those  of  the  world,  and  are  compelled  to 
say  that  if  with  given  wages  higher  and  higher  prices  are  desir- 
able without  regard  to  an  increased  exchangeable  value  of  the 
products  of  labor  the  United  States  would  be  unwise  in  stopping 
at  any  form  of  metal  money,  and  should  at  once  resort  to  the  paper 
mill  and  printing  presses. 

WHAT  IS  MATERIAL  CIVILIZATION. 

If,  on  the  other  hand,  the  purpose  of  this  commercial  struggle 
and  material  civilization  is  to  give  greater  and  greater  purchasing 
power  to  a  day's  labor,  so  that  every  home  may  have  more  and 
more  of  the  comforts  of  life,  and  instead  of  our  present  necessaries 
becoming  luxuries  many  present  luxuries  may  become  and  be 
regarded  as  necessaries,  greater  purchasing  power  should  be  given 
to  every  day's  labor,  the  whole  world  should  continue  in  the  arts  of 

27«3 


121 

peace,  and  we  shonld  welcome  every  discovery  and  process  that 
would  tend  to  lessen  the  cost  of  those  things  that  make  life  worth 
living. 

THE  TWENTIETH  CENTURY  WIIX  OPEN  WITH  THE  FIRST  REAL  BATTLE  FOR 
COMMERCIAL.  SUPREMACY. 

The  twentieth  century  will  open  with  the  first  really  great  battle 
for  the  commercial  supremacy  of  the  world.  With  what  arms 
shall  we  enter  the  fight?  Shall  we  depend  upon  bows  and  arrows 
while  our  competitors  arm  with  the  most  approved  muskets? 
Shall  we  depend  upon  the  old  wooden  hull,  with  its  white  wings 
stretching  out  from  the  mast  waiting  patiently  for  a  favorable 
wind,  while  other  competitors  traverse  the  sea  in  steel-clad  grey- 
hounds? Shall  we  subject  every  producer  of  the  United  States  to  an 
unequal  contest  by  tlie  adoption  of  a  measure  of  value  that  will 
suffer  a  discount  at  every  turn  in  every  market  of  the  world,  when 
this  trade  contest  is  to  be  settled  by  a  one-quarter,  one-eighth, 
one-sixteenth,  or  one  thirty-second  of  a  cent? 

THE  DISADVANTAGE  IN  EXCHANGE  ALONE  MEANS  FAILURE. 

The  certain  disaster  that  is  sure  to  follow  the  disadvantage  in 
exchange  alone  by  a  country  using  a  different  measure  of  value 
from  the  great  commercial  nations  of  the  world  has  been  so  keenly 
felt  that  Japan  and  Russia,  the  only  two  remaining  silver-stand- 
ard countries  where  the  light  of  civilization  has  begun  to  dawn 
and  the  energizing  thrill  of  commerce  has  been  felt,  have  since 
the  1st  of  January  adopted  measures  establishing  the  gold  stand- 
ard. Russia,  by  an  Imperial  decree  of  January  3, 1897,  established 
the  gold  standard,  reducing  silver  to  the  place  of  subsidiary  coins, 
while  Japan,  by  legislative  enactment  just  passed  both  legislative 
bodies,  has  determined  a  ratio  for  gold  and  silver — 32^^  to  1 — with 
the  distinct  purpose  of  establishing  within  their  own  realm  the  gold 
standard  also,  and  reducing  the  use  of  silver  to  the  subsidiary 
coins. 

If  the  United  States  would  take  her  proper  place  at  the  head  of 
all  nations  in  the  grand  march  of  civilization,  she  must  remove 
all  barriers  between  the  genius  of  her  people  and  her  mighty  army 
of  producers  and  the  world's  consumers,  instead  of  inviting  the 
most  fatal  obstacle  to  her  supremacy. 

2763 


122 


THE  DEMAND  OP  THE  HOUR. 

Theories  must  give  way  to  experience;  fancy  must  yield  to  facts; 
patriotic  impulse  must  override  blind  partisanship;  prejudice  and 
false  assumption  will  wither  in  the  sunlight  of  truth.  This  great 
question,  involving  as  it  does  the  hope  of  the  people  and  the  future 
of  the  nation  itself,  calls  loudly  for  the  display  of  candor,  earnest 
thought,  moral  courage,  the  highest  order  of  patriotism,  and  our 
best  statesmanship. 

In  conclusion,  therefore,  let  me  express  the  hope  that  in  the 
consideration  of  -this  subject  at  least  no  attempt  will  be  made  to 
overlook,  forget,  and  much  less  obscure  or  suppress  the  truth, 
but  that  the  responsibilities  of  the  citizens  of  this  Republic  may 
be  kept  constantly  in  view. 

A  careful  study  of  each  proposition  and  the  adaptation  of  the 
various  principles  involved  in  this  measure  to  our  condition  and 
needs  will,  I  think,  justify  the  following  conclusions: 

Fii'st.  Our  banking  business  would  be  taken  out  of  politics. 

Second.  Our  Government  would  be  taken  out  of  the  banking 
business. 

Third.  We  would  escape  the  expense  and  danger  always  attend- 
ing fiat  money  issues. 

Fourth.  We  would  save  in  interest  on  our  national  debt 
$12,000,000  every  year. 

Fifth.  We  would  demonstrate  to  the  world  that  our  credit  was 
higher  than  that  of  any  other  nation,  the  rate  of  interest  on  our 
public  debt  being  reduced  to  2  per  cent,  while  that  of  Great  Britain 
is  2|. 

Sixth.  Our  measure  of  value  being  definitely  determined  and 
permanently  established,  hundreds  of  millions  of  dollars  from 
abroad  and  at  home  would  instantly  seek  the  channels  of  trade 
and  at  constantly  lowering  rates  of  interest,  affording  every  good 
enterprise  ample  means  for  its  nromotion. 

Seventh.  Every  dollar  of  our  currency  would  be  good  enough 
to  pass  current  in  every  land  and  travel  around  the  entire  world 
side  by  side  with  the  Bank  of  England  notes. 

Eighth.  The  entire  reserves  of  our  banks  would  be  crold  or  its 
equivalent. 

Ninth.  A  vast  amount  of  gold  and  silver,  taking  the  place  of 


123 

our  smaller  bills,  would  circulate  among  all  our  people  with  a  most 
salutary  effect. 

Tenth.  Our  smaller  villages  and  more  remote  places  would  have 
the  advantage  of  banking  privileges,  and  equal  justice  would  bo 
meted  out  to  every  honest  man  entitled  to  credit. 

Eleventh.  The  producers  of  every  kind  and  in  every  section 
would  be  supplied  with  ample  currency  at  reasonable  rates  of 
interest  to  handle  or  hold  their  crops  or  manufactures  until  they 
desired  to  dispose  of  them. 

Twelfth.  The  rates  of  interest  would  be  much  lowered  and 
equalized  throughout  the  United  States, 

Thirteenth.  Instead  of  our  eight  different  kinds  of  money  we 
would  have  but  two  besides  gold  and  silver,  and  ultimately  but 
one. 

Fourteenth.  All  holders  of  notes  would  be  guaranteed  against 
loss,  the  United  States  redeeming  them  in  case  of  liquidation. 

Fifteenth.  All  depositors  in  national  banks  could  be  insured 
against  loss  in  case  of  a  bank  failure. 

Sixteenth.  Bank  panics  and  currency  famines  would  be  impos- 
sible, and  therefore  unknown. 

Seventeenth.  The  cotton  and  grain  growers,  the  stock  raisers, 
and  manufacturers  would  soon  learn  that  their  own  property — 
stock,  grain,  cotton,  and  merchandise— is  as  good  a  basis  for 
money  in  the  form  of  currency  as  gold  or  silver,  and  that  the  only 
prerequisites  are  a  fixed  measure  of  value,  means  of  repayment, 
and  a  good  name. 

Eighteenth.  The  credit  of  the  nation  could  not  then  be  strained 
and  brought  in  question,  as  it  has  been  during  the  past  four  years, 
paralyzing  trade,  prostrating  commerce,  ruining  enterprises,  and 
destroying  all  credit,  which  has  become  so  important  a  part  ot 
modern  civilization. 

Nineteenth.  All  banking  institutions  would  seek  protection 
under  this  law,  the  system  would  become  uniform  and  universal, 
the  individual  would  be  better  served,  and  the  public  better  pro- 
tected. 

Twentieth.  Doubt  would  give  way  to  certainty,  fear  to  hope, 
confusion  to  order,  hesitation  to  confidence,  and  upon  our  integ- 
rity and  intelligence  would  rest  the  beneficent  smile  of  Providence. 

Let  us  hope,  then,  that  in  the  consideration  of  a  subject  that 
should  be  absolutely  free  from  political  prejudices,  the  bitterness 

27t53 


124 

of  the  partisan  contest  may  disappear;  tliat  the  charge,  insinuar 

tion,  and  suspicion  even  of  dishonest  intention  on  the  part  of  a 

great  portion  of  the  American  people  may  linger  no  longer,  but 

that,  with  a  full  realization  of  the  v/rongs  suffered  and  injuries 

and  losses  inflicted  upon  them,  we  may,  as  true  men,  patriotic 

citizens,  and  wise  legislators,  having  in  trust  the  interests  not 

only  of  our  own  immediate  neighborhood  but  of  every  section, 

anfl  of  every  man  even  living  under  our  flag — realizing  that  he  is 

£)ur  brother — seek  out  the  cause  of  his  complaint  and  study  how 

to  guarantee  to  him  equal  opportunities  under  the  operation  of 

just  laws. 
2763 


INDEX 


Page. 

Advantage  of  new  system  reaped  by  farmers  and  producers 06 

Advantages  to  banks  of  H.  R.  5'J 83 

twenty  specific 122,123 

Advisory  board,  advantages  of 33 

Agricultural  products,  table  showing  relative  prices  of 112,113 

Alternating  standard  a  curse 93 

Appreciation  of  gold 107 

tested  by  wages 109 

in  terest  on  Government  bonds 1 09 

Arthur  (President),  warning  by 18 

Assets,  banks  may  issue  notes  against 8 

Government  may  reimburse  itself  out  of  insolvent  bank's 11, 76 

note  holder  should  have  a  prior  lien  on 81 

notes  against,  how  issued 8,43 

Assistant  cashier,  powers  of ,  to  sign  notes,  etc 13,82 

Atkinson,  Edward,  estimates  of 09 

Australasia 98 

Baltimore  plan,  the 24 

Bank  loans,  life  of 107 

note  circulation,  amount  of 23 

notes,  redemption  of  national 73 

officers,  oaths  of,  how  administered 13,82 

of  England  compared  with  other  English  banks 54 

diagram  showing  circulation  of 51 

forfeiture  of  issues  of  other  banks  assumed  by 53 

metal  expansion  of 27 

notes  a  legal  tender 53 

secured  circulation  of 53 

table  showing  circulation  of,  1894-95 54 

France,  diagram  showing  circulation  of 61 

table  showing  circulation  of 60 

loans  its  notes 25 

organization  of 59 

Germany  (Imperial),  authorized  circulation  of 57 

essentially  a  bank  of  note  issues 58 

loans  its  notes  instead  of  deposits 58 

note  issues  of,  exceeding  the  legal  limit 58 

notes  of,  not  a  legal  tender 56 

table  showing  circulation  of 58 

Banking  capital  must  be  attracted  by  any  new  plan 83 

function.  Government  must  be  relieved  of  the 17 

in  Germany - 27 

Canada - 23.47 

Scotland 49 

interests  should  bs  unaffected  by  political  changes 31 

system  bad,  our  present 20 

the  result  of  evolution - 23 

Banks  can  maintain  gold  payments  better  than  the  Government 86 

2763  125 


126 

Page. 

Banks,  causes  of  failure  of 81 

diagram  showing  circulation  of 45 

directors  must  examine  their 81 

earnings  of C7 

in  other  countries  maintain  gold  payments 80 

ma  J'  insure  depositors  against  loss 10.76 

issue  notes  against  assets 8.43 

not  speculate 12.80 

must  not  promote  enterprises. 80 

national,  not  favored  institutions 67 

New  Hampshire,  table  showing  condition  of,  under  Suffolk  sys- 
tem    64, C5 

note  issues  of  small 60 

note^  shall  be  a  legal  tender  between 9,73 

of  city  and  country  compared 2o 

organization  of 35 

outside  clearing  house  districts,  how  they  shall  clear 9, 74 

possibilities  of  the  present,  under  a  "bufifolk  system" 62 

proportion  of  State  and  national 67 

shall  organize,  how 5.35 

small,  need  more  notes  prox>ortJonately 36 

table  showing  circulation  of 46 

deposits  of 78 

total  resources  of 88 

with  $20,(X)0  capital  authorized 10,74 

Battle  for  com  nercial  supremacy,  twentieth  century  will  open  with 

first  real 121 

of  material  civilization,  the  real 110 

Bill  n.  R.  50,  advantages  to  banks  under 83 

discussion  of,  by  sections 33-83 

enabling  clause  of 80 

eriiarantee  funds  provided  in 11,79 

penal  provisions  of 12,80 

system  proposed  by,  to  bo  gradually  adopted 63 

text  of 4 

twenty  specific  advantages  secured  in 122,123 

what  a  bank  might  do  under 68 

6442  redrafted  in  H.  R.  50 14 

Bimetallism,  international 19 

so  called,  has  always  brought  about  monometallism 105 

W.  A.  Shaw  on 105 

Bond  notes,  amount  of,  that  banks  shall  take  out 5,35 

redeemable  in  gold  at  bank  of  issue. 39 

shall  be  alegal  tender  between  banks 6,39 

syndicate  of  1895 46 

Bonds,  appreciation  of  gold  tested  by  interest  on 109 

exchange  of  present  bond^  for  new 6,36 

fund  the  national  debt  in  gold 17 

Government  must  sell,  to  obtain  gold 86 

how  to  be  issued ,.. 35 

may  be  exchanged  for  gold  or  legal-tender  money 12,80 

sold  for  revenue 13,82 

of  United  States  payable  in  silver  as  well  as  in  gold 17 

our  demand  obligations  require  the  sale  of 18 

prepared  by  Secretary  Foster 18 

price  at  which  they  will  be  received 5,35 

when  due 6 

8763 


127 

Page. 

Branch  banks  maybe  desirable 74 

Branches,  banks  may  establish.. 10,74 

Business  done  by  drafts  and  checks 30 

Canada,  credit  currency  in 28,47 

Canadian  banking  system 28 

banks,  diagram  showing  circulation  of 48 

Capital,  equitable  adjustment  of  labor  and 117 

Causes  of  our  deplorable  financial  condition 14 

the  present  crisis 118 

failure  of  banks 81 

Century,  retrospect  of  the 116 

twentieth,  will  open  with  first  real  battle  for  commercial  su- 
premacy    121 

Changes  proposed 32 

Charters  for  clearing  houses,  Government 83 

Cheap,  money  should  be __ 84 

Checks  and  drafts,  business  done  by 30 

Circulation,  amount  of  bank-note 23 

coin  and  paper,  of  the  United  States,  1860-1896 102,103 

comparison  of,  per  capita 97 

graduated  tax  upon 70 

in  different  sections  of  the  United  States  to-day  compared 

with  prices 101 

desirable,  metal 38 

etc.,  of  failed  banks  in  each  year _ 71 

of  Bank  of  England,  diagram  showing 51 

secured 53 

table  showing 54 

Bank  of  France,  diagram  showing 61 

table  showing 60 

Bank  of  Germany,  diagram  showing 57 

table  showing 58 

Canadian  banks,  diagram  and  table  showing 48 

national  banks,  diagram  showing 45 

table  showing 46 

Scotch  banks,  diagram  showing 49 

table  showing 50 

per  capita,  free  coinage,  mines  and  mints  bear  no  relation 

to 98 

how  determined 96 

tn  the  United  States 30 

of  gold,  Hawaii  has  the  greatest 96 

sil  ver.  Straits  Settlements  have  the  greatest,  96 
specie  and  bank-note,  in  United  States,  18U0-1859,  table  show- 
ing   100.101 

under  Suffolk  system,  expansion  of 63 

Civilization,  the  real  battle  of  material 110 

what  is  material 130 

Clearing-house  charters  may  be  granted  by  the  Government 13,82 

districts,  advantages  of 72 

banks  must  belong  to  some  one  of  the 9,72 

how  formed 9,72 

notes  must  be  returned  to  their  respective. ..  9,72 

houses.  Government  charters  for 82 

in  New  York  and  Boston,  operations  of 70 

Coin,  construing  the  meaning  of  the  word - 86 

2763 


128 

Page. 

Coin,  juggling  -with  the  word 17 

Commercial  nations  have  an  ample  supply  of  gold „.. 37 

supremacy,  twentieth  century   will  open  with   first  real 

battle  for 121 

Commodity,  gold  only  a 88 

Comptroller  of  the  Currency,  compensation  of,  inadequate 34 

likely  to  have  local  prejudices 33 

report  of 42,G7,81 

Condition  of  the  country  demands  a  new  financial  system 66 

Conditions,  local,  effect  of,  on  per  capita  circulation 96 

Conditions  necessary  to  permanent  prosperity 4 

Congestion  of  money  in  financial  centers 31 

Congress  does  many  foolish  things 15 

Continuing  body,  importance  of,  in  comptrolling  department 34 

Contraction  of  currency  impossible  under  H.  R.  50 37,41 

Credit  currency,  all  experience  justifies 28 

in  Canada 47 

Great  Britain 51 

too  limited 53 

Irish  banks 26 

other  countries 26 

Scotland 49 

must  be  obtained 89 

provisions  for 43 

reservation  of,  by  Bank  of  England 52 

Sir  Robert  Peel  on 52 

sound  in  principle 22 

Credit  is  strained,  national 118 

strained 15 

of  the  nation,  free  coinage  will  not  strengthen  the 119 

Crisis,  the  present,  causes  of 118 

due  to  want  of  wise  counsel 33 

Crops  and  silver  bear  no  relation  to  each  other 115 

present  system  affords  no  means  for  raising  money  to  move 46 

Currency,  advantage  of  a  uniform  sj'stem  of 75 

a  secured,  is  inelastic 23 

credit.    See  Credit. 

fixed  in  quantity 31 

free  coinage  of  silver  will  not  give  us  an  elastic 120 

movement  contradicting  natural  law 46 

no  contraction  of ,  under  H.  R.  50 37 

should  be  reformed,  our 4 

want  of  a  sound  and  elastic,  the  trouble 21 

what  a  bank  actually  does  to  get 67 

Current  redemption  of  notes  insured  under  H.  R.  50 74 

C  irse  of  an  alter;. ating  standard 93 

Djbt,  national,  amount  of 31 

fund  the 17 

funding  of 35 

Harrison  Administration  paid  off 23 

ought  to  be  funded  in  a  popular  loan 31 

will  soon  be  paid  or  must  be  funded 23 

Debts,  Government  without  resources  to  meet  its 16 

Deficiency  in  I'ovenue,  bonds  may  be  sold  to  provide  for 13,82 

power  of  Secretary  of  the  Tre:isury  to  meet 83 

Demagogues  take  advantage  of  ignorance  to  arouse  prejudice G8 

Demand  obligations,  danger  of 42 

2763 


129 

Page. 

Demand  obligations,  dates  for  canceling,  fixed 43 

free  coinage  will  not  retire  the 93 

Government  redemption  of 31 

increased  in  1890 15 

must  be  retired 89 

require  the  sale  of  bonds,  our 16 

retire  all 17 

See  also  Oreenbacks. 

Demand  of  the  hour,  the 123 

Demonetization  defined 90 

Department  of  Finance  provided 4,33 

Depositors,  insurance  of ,  against  loss  by  bank  failures 11,76 

Depositors  of  failed  bank  paid  by  the  Government  in  sixty  days 11,76 

Deposits  of  all  banks  and  of  failed  banks,  table  showing 78 

Diagnosis,  treatment  depends  upon  the 14 

Diagram  showing  circulation  of  Bank  of  England 51 

Bank  of  France 61 

Bank  of  Germany 57 

Canadian  banks 48 

English  joint  stock  banks 56 

national  banks 45 

Scotch  banks 49 

Director  of  the  Mint,  report  of  the 89,94 

Directors,  duty  of 81 

must  examine  their  banks 13,81 

restrictions  concerning  loans  to 13,80 

Disaster  wrought  by  Wilson-Gorman  Act 119 

Dividends  of  failed  banks  average  75  per  cent , 78 

Duration  of  bonds 6,36 

Earnings  of  national  banks 67 

Eckels,  James  H.  (Comptroller  of  the  Currency),  report  of 43,67,81 

Elastic  currency,  free  coinage  of  silver  will  not  give  us  an 130 

Secretary  Windom's  views  on 44 

want  of,  the  trouble 21 

Elasticity,  conditionsof 33 

Enabling  clause  of  H.  R.  50 80 

English  bank  act  of  1814,  suspension  of 27,53.53 

joint  stock  banks,  diagram  showing  circulation  of 56 

table  showing  circulation  of 55 

Enterprises,  banks  must  notpromote 80 

Examination  of  banks  by  directors. 13,81 

Exchange,  disadvantage  in,  means  failure 131 

of  bonds  for  gold  or  legal-tender  money 13,80 

present  bonds  for  new  bonds 6,36 

notes  for  gold  and  silver  by  banks  in  reserve  cities 7,40 

outside  reserve  cities. . .    7, 40 

Expenditures,  free  coinage  of  silver  will  not  lessen 119 

Experience  justifies  credit  currency 28 

of  other  countries  valuable 23 

theories  must  give  way  to 133 

Evils  from  which  wo  suffer,  importance  of  understanding 14 

to  be  obviated 31 

Evolution,  banking  the  result  of 23 

selection  of  gold  as  a  standard  the  result  of 98 

Failed  banks,  average  dividends  o!:,  are  75  per  cent 78 

circulation  of,  in  each  year 71 

deposits  of,  table  showing 78 

27C3— 9 


130 

Page. 

Failed  tanks,  Government  shall  rocleem  notes  of 10,75 

l^'ailure,  disadvantage  in  exchange  means --  121 

Government  redemption  of  notes  in  case  of -.  75 

of  national  banks,  causes  of. 81 

Farm  products,  lower  in  ISiOthan  in  1891 115 

Farmers  and  producers  will  reap  advantages  of  new  system 68 

Finance,  department  of 4,33 

ministers  of 4,33 

Finances  should  be  readjusted,  our 4 

Foreigners,  investments  of,  withdrawn 16 

Forfeiture  of  issues  of  other  banks  assumed  by  Bank  of  England. 53 

Foster,  Charles  (Secretary  of  the  Treasury),  prepared  bonds 18 

Fi'ance,  attempt  of,  to  maintain  parity  of  two  metals 105 

Bank  of.    See  Bank. 

Free  coinage  brings  no  metal  to  the  mint  necessarily 90 

has  not  increased  our  gold  as  rapidly  as  limited  coinage 

has  increased  silver 90 

never  has  raised  the  price  of  any  metal 91 

of  silver.    See  Silver. 

two  metals  prevents  their  concurrent  circulation 91 

silver  advocates,  argumentative  methods  of 110 

Functional  trouble  affecting  our  monetary  system 20 

Fundamental  trouble,  the 14 

Funding  the  national  debt 17,33,35,38 

Funds,  investment  of  the  two  guarantee  funds  provided  by  bill  H.  R.  50.  11, 79 

Gain  to  the  Government  in  funding  thedebt 41 

Gambling  instinct,  free  silver  coinage  will  not  eradicate  the 118 

Germany,  banking  in... 27 

Germany,  Bank  of.    See  Bank. 

Gold  and  silver  countries,  metal  basis  of,  compared 105 

in  the  United  States,  table  showing  stock  of 89 

reservesof  banks  shall  be  in.. 40 

appreciation  or  depreciation  of,  how  determined 107 

as  a  standard,  selection  of,  the  result  of  evolution 96 

drained  from  the  Treasury 16 

future  supply  of 38 

Government  must  sell  bonds  to  obtain 86 

has  fallen  one-half  or  wages  have  doubled  since  1840 109 

Hawaii  has  greatest  per  capita  circulation  of 96 

hoarding 16 

in  banks  and  gold  required 41 

is  only  a  commodity 88 

not  rapidly  increased  by  free  coinage 90 

payments,  banks  can  maintain,  better  than  the  Government 86 

in  other  countries  maintain 86 

Government  has  no  natural  facilities  for  maintaining.  80 

our  present  gold  supply  sufficient  to  maintain 87 

premium  on,  and  gold  value  of  United  States  legal-tender  notes, 

1862-1879,  table  showing 109 

prices  in,  of  223  articles,  1810-1891,  table  showing 114 

production  of 38 

reserve.  Bank  of  England  protects,  by  raising  rate  of  interest 53 

standard  adopted  by  Russia  and  Japan 131 

country  should  place  itself  squarely  on  the 19 

countries  use  more  silver  than  silver-standard  coun- 
tries    96 

difficulty  of  maintaining  the 16 

2763  J 


t 


131 

Page. 

Gold  standard  has  the  selection  of,  worked  injustice 107 

our  people  favor  the 31 

stock  of,in  various  countries. 37 

in  the  banks  and  the  Treasury,  ample 37 

supply  sufficient  to  maintain  gold  payments 87 

will  be  obtained  by  any  country  selecting  the  gold  standard 96 

Government  a  guarantor  of  the  bank's  obligations 31 

debt,  reasons  for  funding  the 38 

gain  to  the,  in  funding  the  debt 41 

has  no  natural  facilities  for  maintaining  gold  payments. . .        86 

issues  discarded  by  leading  nations 43 

may  grant  clearing-house  charters 13 

reimburse  itself  out  of  assets  of  bank 11,76 

must  be  relieved  of  banking  functions 17 

sell  bonds  to  obtain  gold 86 

not  to  pay  out  notes  or  certificates  after  1898-99 8,43 

redeem  bond  notes 39 

redemption  of  demand  obligations 31 

notes  in  case  of  failure 75 

reserve  unwise,  large 19 

shall  pay  depositors  of  insolvent  bank  in  sixty  days 11,76 

redeem  notes  of  insolvent  banks 10,75 

should  go  out  of  the  warehouse  business 40 

without  resources  to  meet  its  debts 16 

Great  Britain,  credit  currency  in. 36,51,53 

Greenbacks,  cost  of  maintaining 43 

gain  to  the  Government  in  retiring  the 41 

may  never  be  retired 16 

protecting  the ., 15 

See  also  Demand  obligations. 

Guaranty  funds,  how  invested 11,79 

Guarantor  of  bank  obligations.  Government  as  a 31 

Harrison  Administration  paid  off  national  debt 33 

Hawaii  has  greatest  per  capita  circulation  in  gold 98 

Higher  prices 117 

Hoarding  gold 16 

of  money 31 

Honesty  a  necessity 17 

Ignorance  of  technical  terms... 34 

Injustice  being  done  sparsely  settled  sections.... .    44 

has  the  selection  the  gold  standard  worked 107 

Insurance  of  depositors  against  loss  by  bank  failures 10,76 

tax,  low  rate  of 78 

Insolvent  banks.    See  Failed  banks. 

Interest,  free  coinaj^o  of  silver  means  high  rates  of 93 

equalization  and  lowering  of  rates  of... 69 

notes  to  bear - 10,75 

on  Government  bonds,  appreciation  of  gold  tested  by 109 

raising  the  rate  of,  by  the  Bank  of  England 53 

rates  of 33 

saving  to  the  people  in 84 

International  bimetallism. 19 

Investment  of  guaranty  funds  provided  in  H.  R.  50 11,79 

Investments  of  foreigners  withdrawn 16 

Irish  banks,  credit  currency  of &i 

Issue  of  bonds,  how  made 35 

Japan,  free  cokiage  of  silver  in - 91 


132 

Page. 

Joint  stock  banks  of  England,  diagram  showing  circulation  of 56 

table  showing  circulation  of 55 

Labor  and  capital,  equitable  adjustment  of 117 

Layman,  plan  adopted  must  be  clear  even  to  the 83 

Legal  tender.  Bank  of  England  notes  a 53 

between  banks,  notes  shall  be  a 6,9,39,73 

notes,  table  shoAving  gold  value  of 109 

quality  of  notes  limited 39 

Sea  Demand  obligations  and  Greenbacks. 

Legislation  demanded,  patriotic 124 

Limit  of  loans  made  by  bank  to  its  officers  and  employees 12,80 

Lincoln,  Abraham,  foresight  of 21 

Liquidation,  acute,  was  not  relieved  by  a  proper  currency  system 120 

Loaning  deposits  and  loaning  bank  notes  are  identical 24 

Loans,  life  of  bank 107 

real-estate 107 

to  officers  and  directors  of  bank,  limit  of 12,80 

Low  prices  a  curse,  are Ill 

Maintaining  the  greenbacks,  cost  of 43 

Measure  of  value  must  be  unalterably  fixed 16 

should  be  unequivocal 16,31 

Metal  basis  of  gold  and  silver  couu  tries  compared 105 

circulation  desii-able 38 

poorer  or  cheaper  drives  out  the  better  or  dearer 105 

Metallic  expansion  of  the  Bank  of  England 27 

Mexico 98 

money,  use  of,  salutary 20 

Ministers  of  finance 4,33 

should  be  removed  from  political  influence 33 

Money,  good,  and  prices  bear  no  z'elation  to  each  other 97 

hoarding  and  congestion  of 31 

kinds  of,  in  circulation 31 

locked  up  in  reserves 19 

red-dog 24 

should  be  cheap 84 

Monetary  system,  functional  trouble  affecting  our 20 

systems  and  stocks  of  money  in  principal  countries  of  the 

world 94,95 

Monometallism,  so-called  bimetallism  has  always  brought 105 

National  banks.    See  Banks. 
debt.    See  Debt. 

credit  always  safe 18 

currency  wanted 70 

New  Hampshire  banks  under  the  Suffolk  system 63 

table   showing   condi- 

tionof 64,65 

Note  holder  should  have  a  prior  lien  on  assets 84 

issues  of  small  banks .: 60 

Notes  against  assets,  how  issued 8,43 

assistant  cashier  may  sign 13 

Bank  of  France  loans  its 25 

Germany  loans  its 58 

exchange  of,  for  gold  and  silver  by  banks  in  reserve  cities 7, 40 

outside  reserve  cities..  7,40 

facilities  for  redemption  of 74 

issued  against  assets.. 8,43 

must  be  returned  to  their  respective  clearing-house  districts 9, 73 

2763 


133 

Page. 

Notes  of  insolvent  banks,  Government  shall  redeem 10,75 

reserve  of  banks  against 8,43 

suspension  of  tax  upon 9,44 

tax  to  be  paid  on 5,a5 

to  bear  interest 10,75 

Oathsof  bank  oflacers,  how  administered 13 

Officers  and  directors,  limitof  loans  to 12,80 

Organic  difficulties  must  be  removed 14 

disastrous  effects  of 16 

Organization  of  banks 35 

Panic  in  1893,  speculation  began  in  1884  and  ended  in 118 

Panics,  speculation  the  chief  cause  of 52 

Paper  money  foolishly  kept  in  circulation 15 

Partisanship  should  disappear 1^ 

Patriotic  legislation  demanded 122 

Peel,  Sir  Robert,  on  credit  currency 53 

Penal  provisions  of  H.  R.  50 13,80 

Peru 98 

Plan  adopted  must  be  clear  even  to  the  layman 83 

banking  capital  must  be  attracted  by  any  new 83 

Political  changes  should  not  affect  our  banking  system 31 

influence,  ministers  of  finance  should  be  removed  from 33 

Popular  loan,  debt  should  be  funded  in  a 31 

Power  for  putting  the  act  into  operation 80 

Prejudice,  demagogues  arouse 68 

Premium  on  gold  and  gold  value  of  United  States  legal-tender  notes, 

table  showing 109 

Price  at  which  bonds  will  be  received 5,35 

Prices  a  curse,  are  low Ill 

and  good  money  bear  no  relation  to  each  other 97 

by  five-year  periods,  1840-1891,  table  showing 115 

circulation  in  different  sections  of  the  United  States  to-day  com- 
pared with 104 

United  States  at  different  periods  compared  with.  104 

fall  of 115,116 

high,  of  1853-1883  explained 116 

how  to  prevent  them  from  falling 117 

in  gold  of  233  articles,  1840-1891,  table  showing 114 

low,  of  1840  explained 116 

of  agricultural  products,  table  showing  relative 112,  llS 

1840-1850  and  1880-1890  compared 117 

wages,  and  transportation.  Senate  report  on 107,111 

Producers  swindled  through  tlie  silver  standard 106 

Promotion  of  enterprises,  banks  may  not  engage  in 80 

Proposed  system  to  be  gradually  adopted 63 

Prosperity,  fixed  standard  important  to  permanent 88 

Rate  of  interest,  raising  the,  by  the  Bank  of  England 53 

Rates  of  interest 33 

equalization  and  lowering  of 69 

Ratios,  commercial  and  coinage 91,93 

Real-estate  loans,  life  of 107 

"Red-dog"  money  34 

Redemption  under  Suffolk  system,  cost  of 63 

fund  for  United  States  national-bank  notes 70 

how  used 9,70 

use  of  excess  of.  over5  per  cent 9.70 

of  bond  notesat banks  of  issue - 39 

2763 


134 

Page. 

Redemption  national-bank  notes —  •  73 

notes,  facilities  for 74 

in  case  of  failure,  by  the  Government 75 

Relief,  intense  desire  for ^^ 

Remedy  left,  the  only. 16 

Report  of  the  Comptroller  of  the  Currency 45,81 

Director  of  the  Mint.. 89,94 

Reserve  unwise,  large  Government 19 

of  bank  against  notes  issued  against  assets 8,43 

Reserves  of  banks  shall  be  gold  and  silver 40 

Resources  of  the  banks,  total.. 88 

Responsibilities  of  citizens 123 

Retrospect  of  the  century 116 

Revenue,  bonds  may  be  sold  to  provide  for  deficiency  in 13,83 

free  coinage  of  silver  will  not  produce 119 

lack  of,  not  our  trouble 18 

power  of  Secretary  of  the.  Treasury  to  meet  any  deficiency  in.  83 
Boot,  L.  Carroll  (Secretary  of  the  sound  currency  committee  of  the  Re- 
form Club  of  New  York),  diagrams  prepared  by 45,48,49,51,56,57,61 

Russia  and  Japan,  experience  of 91,97,98,131 

Scotch  banks,  credit  currency  of 36 

diagram  showing  circulation  of 49 

table  showing  circulation  of 50 

Scotland,  credit  currency  in 38,49 

Secured  currency  is  inelastic 33 

Secretary  of  the  Treasury,  power  of,  to  meet  any  deficiency  in  revenue. .  83 

Shaw,  W.  A., on  bimetallism 105 

Silver  and  crops  bear  no  relation  to  each  other.. 115 

bonds  of  the  United  States  payable  in. 17 

free  coinage  of,  American  people  opposed  to 19 

at  the  present  ratio,  would  destroy  two-thirds 

of  our  money 98 

in  Japan 91 

means  high  rates  of  interest 93 

will  not  cure  our  ills 89 

eradicate  the  gambling  instinct 118 

give  us  an  elastic  currency 120 

produce  revenue 119 

retire  our  demand  obligations 93 

strengthen  the  credit  of  the  nation 119 

standard,  producers  swindled  through  the 106 

Straits  Settlements  have  greatest  per  capita  circulation  of 96 

warehousing  of ,  in  the  Treasury 31 

work  provided  for 38 

Small  banks  provided  for 74 

capital,  banks  with,  authorized 10,74 

Sound  currency  system,  three  objects  essential  to 88 

want  of,  the  trouble y 31 

Speculation  began  in  1884  and  ended  in  panic  in  1893 118 

by  banks  prohibited 13,80 

the  chief  cause  of  panics ,.  52 

Speculations  started  by  credit,  not  money 29 

Standard,  a  fixed,  important  to  permanent  prosperity 88 

curse  of  an  alternating 93 

of  the  civilized  world,  we  should  ha ve  the  93 

selection  of  gold  as  the,  the  result  of  evolution 96 

tampering  with  the 00 

2763 


135 

Page. 

Standard,  unequivocal,  wanted  above  all  things... 1()6 

State  bank  notes  not  wanted I'C? 

banks,  number  of -. >'>'i 

Sfcialt   Settlements,  have  greatest  per  capita  circulation  in  silver tS 

Suffolk  system — - 2o 

cost  of  redemption  under 6:i 

expansion  of  currency  under 62 

New  Hampshire  banks  under 62 

table  showing  condition  of.  6 1, 65 

Suspension  of  tax  upon  notes 9,44 

the  English  bank  act 27,52.53 

Table  showing  circulation  of  Bank  of  England 51 

France 60 

Germany 53,59 

Canadian  banks. 48 

English  joint-stock  banks 55 

national  banks 46,47 

Scotch  banks 50 

coin  and  paper  circulation  of  the  United  States,  1869- 

1880 102,103 

deposits  of  failed  banks 78 

monetary  systems  and  stocks  of  money  of  the  principal 

nations  of  the  world 94,95 

premium  on  gold  and  gold  value  of  United  States  legal- 
tender  notes,  1862-1879 109 

prices  by  five-year  periods,  1840-1891 115 

relative  gold  prices  of  223  articles,  1840-1891 114 

prices  of  agricultural  products,  1840-1891 112,113 

wages  in  all  occupations,  1840-1891 108 

specie  and  bank-note  circulation  of  the  United  States, 

1800-1859 100,101 

stock  of  gold  and  silver  in  the  United  States 89 

Tariff  of  1894,  disaster  wrought  by - 119 

will  not  solve  our  present  difl^culties 3 

Tax,  low  rate  of  insurance 78 

to  be  paid  on  notes 5,35 

upon  circulation,  graduated 70 

notes,  suspension  of 9 

Technical  terms,  ignorance  of 24 

Text  of  bill  H.  R.  50 , 4 

Theories  must  give  way  to  experience 122 

Treasury,  gold  drained  from  the 16 

Treatment  depends  upon  the  diagnosis 1^ 

Uniform  system  of  currency,  advantage  of 75 

United  States 98 

Wages,  appreciation  of  gold  tested  by 1C9 

have  doubled  since  1840  or  go!  d  has  fallen  one-half -      109 

relative,  in  all  occupations,  1810-1891,  table  showing 108 

Warehouse  business,  Government  should  go  out  of  the 40 

Warehousing  of  silver  in  the  Treasury. 31 

Wilson-Gorman  act,  disaster  wrought  by  the - - 119 

Windom,  William  (Secretary  of  the  Treasury),  on  elastic  currency 4i 

2763 


# 


Dinaer 
Gaylord  Bros. 

NCf]!.';''  Makers 

Stockton,  Calif. 

PAT.  JAN.  21.  1908 


m-: 


741837 


UNIVERSITY  OF  CALIFORNIA  LIBRARY 


,V„„ 


